Other than convenience of doing it all in one place for those folks who tweet using twitter's own web-interface Primary, it appears primarily security is on twitter's mind:
" Twitter’s link service at http://t.co is used to better protect users from malicious sites that engage in spreading malware, phishing attacks, and other harmful activity. A link converted by Twitter’s link service is checked against a list of potentially dangerous sites. When there’s a match, users can be warned before they continue."Twitter seems to still mention and even endorse their strategic (?) partner, bit.ly, however in long term as they improve the service and reporting and metrics, it is certain that they will eat bit.ly's lunch.
You can read Twitter's official announcement here.