I'm with the OP; it's not exactly the most well-thought-out part of that movie.
On the other hand, it did give rise to a good gag in one of my favorite Trek parodies, so that's all right.
http://www.youtube.com/watch?v=5lxpNec3UAg
Yeah, I totally agree. This was really dopey and it seemed like it was stuck in there to make my mother giggle.
Part of the reason why your genitals are located where they are is to protect them.
Evolution is funny that way. The ultimate purpose of any species is to continue the species so oddly enough your reproductive organs are put in a place on your body where they are the least likely to be damaged.
On a major joint in your leg would not seem the likely way for evolution to work out. In fact, I would dare say if evolution worked that way for that species, they'd be extinct before they ever attained sentience.
-Shawn