Human beings are social animals. Much of our behavior is unconsciously controlled by social expectations. We do not have free will, in the sense that most people understand that term: our choices are completely determined by our circumstances.
However, we are not purely expressions of social policy, and the illusion of free will is necessary to functioning of both individuals and society. My standard example is temperature: there is no such thing as temperature at the atomic level. Temperature is not a fundamental constituent of the universe; rather, it is a description of the behavior of an aggregate. But this does not make it any less useful of a truth; trying to live without the concept of temperature will get you burned.
Free will is the same. Although we don't actually have it, we have to act as if we do. In practice this isn't so difficult, just as in practice atomic physicists have no trouble making a pot of tea without setting themselves on fire. Our brains are primed to use the concept of free will as an explanatory and predictive heuristic.
However, as usual, our common sense notions can be improved by scientific understanding. Here's a great article that explains how recognizing the limits of free will can make our criminal justice system more humane and effective: The Brain on Trial.
The important point of this article is that it emphasizes that prisons will still exist:
Biological explanation will not exculpate criminals; we will still remove from the streets lawbreakers who prove overaggresssive, underempathetic, and poor at controlling their impulses.
Just because we understand that people's actions are controlled by their circumstances doesn't mean we can't prevent them from doing bad actions. And by the way, a society in which criminals are locked up provides a set of circumstances which result in less people committing crime.
P.S. This post was composed on Safari, a piece of software so unremittingly bad that it has single-handedly convinced me to never buy a Macintosh.