Well, they are created to cause trouble, in most cases. They can turn on the TV/stereo when your Sim is sleeping. I heard about the 99% invention completion process too. If the Magical Gnome of Invention appears next to a Scraptastic Workbench with an unfinished project on it, he will magically complete it to 99% complete.
Lastly, don't forget that you can sell them too!
They cost around one thousand simoleons each. Or use them as an exotic decoration...
P.S. Did you know that there is a gnome at the Goth household?