A simple look at the numerous and opposing forces at play in the United Nations will justify the continued support of nations states over a more centralized world system of governance. Certainly, the idea of localizing the powers of governance away from large nation states would only serve to divide and weaken the collect power thus increasing the risk of conflict, corruption and mismanagement.
If human nature was ready for more unity and less individualistic goals, I would support some form of centralized world system. Unfortunately, I fear that we are not ready for such a reality.
Nation states are needed to keep track of citizens and laws. Without nation states we would have a big country that couldn't be kept in order. We would have to designate areas to certain citizens. This would be just like states so there wouldn't be any point in doing away with states.
Nations states certainly seem to be needed by the peoples of the world, because that's the political grouping that most people evidently prefer. There seems to be some element of tribalism inherent in our nature that makes us group together and identify ourselves as a unit, with our own name and emblems and insignia of power. Throughout history, that's been the case.
Yes, nation states are needed, because it is the best form of government that we have. We cannot have anarchy, because that results in a lack of private property rights, which keeps everyone poor. Also, having world government will not help anything either, because it would be very corrupt and inefficient.