Are these really worth it or necessary for your business?
A lawyer friend once said to me that contracts are a waste of time and money - if you have a bad client then they'll probably break or find a way out of a contract. Contracts cost lots of money (especially if your work is varied and you need specific contracts for different projects) and can also scare some customers off. The only time I've ever done one was for a 6 figure project.
Work hard on being good at your design work and being nice to clients. Good relationships can count far more than pieces of paper.
I kind of agree with you. But only up to a point. I'm a photographer, not a designer, but I think our professions are close enough in this case.
Small jobs, with people you know.... I don't think contracts are necessary, though of course some people are actually more comfortable having the contract, due to their own past experiences. A good working relationship with your clients will let you know which clients prefer contracts vs those that don't. And which clients you can trust to work for, without a contract.
However, I almost always lay out a detailed plan of the work I am going to provide, and the resources and payments the client is going to provide (in an email or series of emails) prior to the work commencing, or at least early on in the project. And I make sure I get a "sure, that's fine" from them before committing a lot of time. Also by email - even if we have been having face to face meetings.
I know that this isn't a "contract" in a legal sense (though it may be useful as evidence if we ever did meet in front of a judge) but my experience (luckily gained usually by watching my friends and colleagues getting into or avoiding problems with their clients) is that most people are honest, but just have bad memories.
In those cases when there is a disagreement over what was promised or agreed to, the parties can refer to the emails. And in most cases they can resolve the issue within a few minutes, because the email has spelled it out. In those few cases where a potential issue was not addressed, I've noticed that both sides will generally acknowledge that this was an unforeseen situation, and decide to split the costs. Nobody feels that they "lost".
I've been lucky enough to avoid problems like these, so this is simply my observations based on watching my friends and colleagues.