Gossip, almost always, has a negative connotation.
Wikipedia gives the following formal definition of gossip, "Gossip consists of casual or idle talk between friends. While ostensibly value neutral, the term often specifically refers to talk of scandal, slander, or schadenfreude relating to known associates of the participants, and discussed in an underhand or clandestine manner."
Having established that, I would attribute the following reasons for people to engage in gossip -
1. Misplaced priorities and misuse of time - otherwise those people would busy themselves in more useful and productive work.
2. Insecurity - it provides one an affected sense of importance and power as you seem to be the holder of some information, however false it may be. As someone else above said, it gives you a false sense of a skewed social standing.
3. An inherent sense of curiosity - I have this story to share (and most often IT IS a rumoured story). So what's yours.
4. Predisposing factors - I saw my family members engage in it and that may have conditioned me in developing a mindset that there is nothing wrong for me to engage in it.
5. Entertainment value - The gossip mongers, even most of us, see a high level of entertainment value in it. A lot of us find it more amusing than a good film or a good read or a good piece of music.
6. Habit - We all know that old habits die hard. If gossiping becomes a habit for whatever reason, it is difficult to unlearn it.
7. Peer pressure - We see people in our subset of contacts at work and socially, enjoy a good piece of gossip and keep the ball rolling and we feel compelled to belong.
8. Negative trait / devillish streak - Perhaps there is that, perhaps so far loosely defined, gene of negativity in all of us that urges us to hurt, harm and be hellish even when we have no concrete reason or motive to be so.