Living in Denial

While watching the movie "Observe and Report", I stopped laughing and started thinking about denial.  What is it about us as people that we will live in denial of reality in order to keep ourselves happy?  Is denial just a ridiculous way of living or is it a necessary way for people to keep the little piece of mind they have?  Is denial just a way for a person to avoid growing up?
We can deny who we are as a person so that we can continue to live the life we think we're supposed to live.  We can deny the truth so that we don't have to deal with the consequences of that truth.  But the funny thing about denial is that you can deny that you're in denial.  Sure, you can tell yourself, for example, that your only eating when you're upset because you're hungry, but you have to think: why are you making an excuse for yourself in the first place?  Because you recognized a problem and decided to continue your course of denial with the action it shows up in.
Then again, the human brain uses denial to keep its sanity alive.  Thinking about people who experience an extremely traumatic event, denial is a way for the brain to begin the healing process.  At first there may be no recollection of the event, but as the healing goes on, a person slowly begins to stop deny that the event happened and allows themselves to move on.
I would like to say that I have never used denial in my own life, but that would be a denial in itself :-).  I think that once you recognize that denial is being used in your life, you can finally deny it access to your life again.