I recently spent a lot of money on a ship in Daggerfall. I checked it out. It seems pretty big and all, but what is it for?
Can I store items in it? Other than that I don't really see what it's for.

Lets see:
*The "ship" option is now free instead of paying fee to travel on the map involving crossing bodies of water.
*One can rest in a ship.
*Storage, I assume as well.

http://www.izhtex.com/tes2/equipment/ships.htm

Yep, it's basicly a house that travels over water.
Plus, you always have instant access to your ship wherever you are. (Hmm, sounds like a WiFi ad)

If you are on the criminal side, you may spawn guards by hitting your ship's door. The guards of the High Seas will spawn on your ship. A nice way of getting free loot. Simply avoid being hit by the guards so that you are not "banned" from your own ship.

Forget spawning guards-- for the criminal types, ships are a goldmine. When you switch between 'ship' and 'town', the inventory in every store instantly restocks. This means you can clear out the same store twenty, thirty, or forty times in a single night after unlocking the door just once. I also think your single chance at picking a lock resets, so if you fail a lockpick check, change modes to your ship and back again, and you should be able to try over.
Somehow, your ship is instantly accessible no matter how far inland you go, even in the mountains. Pretty handy for a ship. This lets you instantly escape the law if you commit a crime. Rest a few hours below deck on your ship, then head back to the town and see if they're still hunting for you.
As others have pointed out in the past, unless you give yourself some personal restrictions on how you use your ship, it's a pretty easy cheat. If you're the type who role-plays your character, pick a coastal city to 'dock' in when you arrive in a province, and only let yourself access the ship from there unless you take the time to travel using it to another city.
(Oh, another fun tip-- the map square just north-west from your ship location (small ship only) contains an entrance to the Mantella Crux dungeon on a tiny island. Just don't go inside unless you've anchored a teleport outside, as there are no exits once you enter...)

Thanks for the information.