HFT is mostly doing the same thing that banks, prop traders, specialists, or hedge funds were doing manually in the past. They risk their own capital to transfer liquidity across time (market-making), place (cross-market arbitrage) and product (trading on statistical correlations). That activity is valuable because it provides liquidity, the ability to buy or sell at a relatively fair price, where it is needed most and enforces structure on the market to keep it efficient.

The speed race between participants is probably not valuable, but it's the least bad form of market structure that exists. Somebody will do these trades, and everybody wants to, so you need some way to pick winners and losers. Having whoever sets the best price fastest win is less prone to gaming than other structures and rewards competition that drives down inefficiency (you have to do every marginally profitable trade because someone else will snatch it up before it turns into a really great one).

If you could put all the top HFT players in a smoky room where they agreed not to buy new faster microwave lines or high-speed switches, they'd certainly agree to. They're already faster than humans and most banks. They win on that front no matter what. All of this speed competition just changes their rank ordering amongst their peers and costs a lot of money.