Interesting topic!
I have always thought that it is for increasing surface area from where pheromones can be better distributed. But here's the problem - with our heads changing the way they did to make the eyeballs move to the front for excellent binocular vision to ease our life in the trees, and our brains moving over forward to give the cerebral cortex some space, our nasal cavities have shrunk to such a degree that amongst animals, we're some of the worst olfactory-capable species. We can't smell to save our lives. So I don't think the pheromone thingy is the primary reason.
If we look at the chafing hypothesis, there might be something there. We have very much the same hair under our armpits, too - everywhere clothing can be constricted and cause chafing. But for this to be of evolutionary origin, individuals
must have died because of chafing. You seldom hear of people chafed to death. I wonder...
We shouldn't ask why we have pubes or armpit-hair. The question should be "why don't we have the same hair everywhere else?" And it seems reasonable, because we
do have hair everywhere else, though in a much atrophied form. Except hair on the head - but that is clearly for heat insulation; we lose more than 80% of our body heat through our heads. (I wonder if skinheads eat more than hairy folks, or are on average thinner?)
So why did the hair atrophy everywhere else? Basically, the same question - but from a different angle.
It could be because of sexual selection, where people started preferring less hairy partners. Had nothing to do with survival, it might even be detrimental because hair is an efficient heat-trapper and will make you loose less energy through thermal radiation. But sexual characteristics need not be beneficial in any form except for pleasing the opposite sex - look at a peacock, for example. And having been wearing the skins of other animals as clothes for quite a while, selection of this nature could have been done only on visible cues, and pubes were hidden under loincloths etc. I don't think this argument holds a lot of water, though.
I dunno. Bit it's interesting to speculate, though. I do think friction might be the answer, but I've never heard of anyone being chafed to death...
...unless the chafing went all septic and gross, and back in the cave-dwellin' days, you probably could die from infected chafing and no soap...
...or individuals with chafed naughty bits simply shagged less, because it was painful?

Then they don't need to actually
die from it?