Yes, it's supposedly for better heat distribution. I have mine vertically, and as the others have said, I also have no problems with my water temperature. I think that the thermal currents created by the warm water rising will distribute the warm water over the tank, so you won't have any cold spots. I put my thermometer on the other side of the tank from the heater, and my temperature is always right where I set it.
My heater is submersible, and there are no problems with getting the cord in the water. I've seen some pictures of tanks where the heater is positioned horizontally at the bottom of the tank. It is a little strange to see a cord running up through the water like that! With the heater positioned vertically, my cord is only about an inch or two under the water. Plus it's a little easier to hide the heater with a plant.
) is the principal mechanism of heat distribution in the tank...
