I'm pretty sure Debian puts security updates in the regular repo as well.
The reason to have a separate repo that only contains security updates is so you can set up a server, only point it at the security repo, and automate updates. Now you've got a server that is guaranteed to have the latest security patches without accidentally introducing bugs caused by incompatible versions, etc.
I'm not sure if this exact mechanism is used by other distros. There's a yum plugin to handle this kind of thing for CentOS, and Gentoo currently has a security mailing list (portage is currently being modified to support security-only updates). FreeBSD and NetBSD both provide ways to do security audits of installed ports/packages, which integrate well with the built-in update mechanisms. All told, Debian's approach (and probably Ubuntu's, since they're so closely related) is one of the slicker solutions to this problem.