The reason for hashing passwords is to prevent anyone from being able to tell what the original password is. That helps to protect the person who set the password against their own stupidity.
If a person used the same password for several different sites and it was able to be read in plain text then anyone with access to one of the servers would know the password to use to log in to that person's accounts on other servers (such as their bank). By hashing the password (preferably after adding a separate salt value to it) you make it just about impossible for anyone with access to the hashed version of the password to work out what the original password is and so you prevent someone being able to use it to break into other sites where the owner has used the same password.
Anyone with access to the database on the server can see the contents if they really want to. You should be able to trust the people supporting the server to not access your database but by hashing the passwords you prevent their being able to see what people's passwords are even if they do look at your database.
Encrypting the passwords would bealmost pointless as anyone with access to the server to see the passwords would also have access to the code to decrypt them.