They can be used for freerolls, some with a chance to qualify for Sunday Million, WPT/WSOP events, etc.
I am personally just saving mine, all though I don't accumulate many. I think once you get to a certain number, it allows you to setup private tournaments. You don't have to spend them, just need to have them in your account.
The answer really depends on how many and what VIP level you are. If you never get above bronze in a month then books/swag, freerolls and satellites are probably the best way to use them.
As for private tournaments, I believe its based on your total points earned and not just your current FPP balance.