IE has been around for a while. The standards kind of came about around 10 years ago (very young still), but there were only two browsers for a long time before that (IE and Netscape/Mosaic), and IE beat Netscape in the first browser war. With IE being the only real browser out it became the "standard." The standards were slower than they are now in making changes. Microsoft, in a relatively good thinking, became to try an innovate and create new "standards" for web design. Since they were the only browser, people didn't care.
Eventually Firefox came around as people got bored of IE6 as it got very stale and Firefox supported standards and gave new life to the standards. This has lead to the second browser wars and involves more browsers. IE has been slow to adopt the standards at first because "if it ain't broken, don't fix it." When Firefox started making a dent in IE's market share of web browsers IE took notice. Internally they wanted to make the change, but unfortunately they had their own "standards" in place, which are incompatible with true standards. If IE6 were to all of the sudden obey standards, most of the web sites out would break. That's been one of the biggest issues with IE7, it fixed some things while breaking existing sites that were made for IE. IE8 is suppose to accommodate standards and still not break older sites by doing fanciness checking of the site to see what "mode" it will try to display the page with.
Personally I don't make any extra effort to support to IE on my personal site, and it looks fugly because of that, and I'm OK with that. I give those users a message about it and tell them to get a real browser. For site I do for other people though I make them look at least decent in IE. IE's lack of CSS support is only effecting the look of the page. All of the functionality should still be there no matter what. Some people use conditional checks for IE and give the page an extra CSS file to make changes to fix IE, but others don't. There's no right or wrong there, it's a decision you have to make as a designer.
I figure if I design by standards, it future-proofs my site for a while. Older sites that are IE designed are on the other hand starting to break, some times breaking horribly bad, even in newer IE releases. So I usually suggest to designers to start with standards, be conscious of where IE will have issues and decide how you want to accommodate IE.
Additional readings:
http://www.webstandards.org/about/history/
http://www.quirksmode.org/oddsandends/history_webdev.html
http://www.w3.org/Consortium/history
http://www.webmonkey.com/tutorial/Web_Standards_for_Beginners
http://en.wikipedia.org/wiki/History_of_Internet_Explorer