People *should* think about eating and going to the toilet in advance, but they don't. I'm sure that a great deal of plays would come under the two hour marks with no intermission, but musicals tend to be longer beasts. Personally, my preference is for no intermission, but if "no intermission" means "people going to the loo and being obnoxious while the show is actually happening in front of them", then I'm happy for there to be one! The final performance of 'Frost/Nixon' was marred for me slightly by the amount of people who just couldn't quite wait for the end before going for a wee.
Besides, traditional theatrical structure means that two acts work better in most cases. Take, for example, the 'RENT' movie. There's a very definite END OF ACT ONE! moment that makes the direct continuation into the second half of the movie a bit disconcerting. If a show were structured more like a movie (as 'Frost/Nixon' most definitely is) then you wouldn't notice so much. But most shows build to an act one climax, the very purpose of which is to send you away buzzing and anxious to come back for the second half. It just wouldn't work if you tried to do those shows with no interval.
So... personal preference aside, it depends on the show. The ones with traditional theatrical narrative that scream out for an interval, those work best with one. The shorter ones that have no such definite moment and work better all in one go, those work best without one. ^_^