From what I can tell, the Ethereum blockchain just stores accounts and balances - why did the original Bitcoin developers choose the method of storing all transactions for validation instead of just account balances? It seems like that would reduce blockchain size on disk quite a bit...
In order to be sure that an address balance is correct, you need to check that all the transactions on that address are valid. So in order to generate a ledger that you trust, you must first download and verify the entire block chain.
Once you've done this, in principle, you could delete the block chain itself and just keep the ledger. However, remember that Bitcoin is a peer-to-peer system. So you keep the block chain so that new users can download it from you.
Exactly the same question was asked to a Bitcoin developer (Peter Todd) during the Bitcoin 2013 Conference.
You can watch his answer here
For those who are too lazy to watch the video the short answer is that they are doing it for security reasons.