Those sticking-out things on the sides of your head - what are they for?
For holding your sunglasses on would be one answer. Helping locate, or localize, the direction of a sound source is another. Much of the design of the human body is down to the requirements of living in the wild on the plains of Africa tens of thousands of years ago.
In those days there were priorities other than getting a deal with a record label. First and foremost was personal survival, closely followed by the survival of the species. So on any encounter with something new and unfamiliar there were three possible courses of action... eat it, escape from it, or mate with it!
The ear is adapted by evolution to help us survive, by pinpointing sources of danger, and by helping us communicate. So the pinna, which is the proper term for the ear 'lug', helps collect and localize sounds. The shape of the pinna, like a miniature satellite dish, collects sound over a relatively large area and funnels it into the auditory canal to the ear drum. At the same time, the body of air it partially encloses resonates at frequencies around 3.5 kHz, thus acoustically 'amplifying' these frequencies.
This helps us hear speech more effectively - not the fundamental tones but the sounds that mark the differences between words.
The main localization function is provided by the fact that we have two ears. But the pinna also helps. By being forward-facing it helps us differentiate between front and back, which the mere fact of having two ears does not. Also, the complex folds cause reflections that subtly boost and cut different frequencies according to the height of a sound source.
So although we do not have any specific detector for the height of a sound source, we can in fact localize quite well in the vertical dimension. So you can tell instantly whether that strange sound you hear is a rat nibbling at your boot laces, or a bird about to dive bomb you with its payload.
Which reminds me of a joke. Did you know that Captain James T. Kirk of the Starship Enterprise did in fact have three ears? His left ear, his right ear, and his final front ear! (Final frontier -- get it??)