Such encryption can be useful to implement a "wipe everything" feature. It is difficult to securely erase things from a SSD (it is already not totally easy with a classic magnetic hard disk, but internal features of the SSD, in particular wear-leveling, make it almost impossible to totally remove all data). With encryption, the problem is much reduced: it is only a matter of erasing the key (and choosing a new one), a mere 128 bits, compared to a dozen gigabytes.
Outside of this secure wipe thing, disk encryption as you describe makes no sense security-wise, because one may assume that an attacker stealing the disk will get the controller with it, including the key... unless the controller does not have the key. This may be a "password-protected disk" in which the encryption key is derived from a password entered at boot-time. If the encryption key is not permanently stored in the disk itself, then encryption at the controller level makes sense because there is little point in doing that in the CPU, unless the attack model supposes that the attacker can spy on the SATA bus. In the realistic model where the attacker is someone who steals the disk (or the whole laptop -- it has better be shut down, not merely put in sleeping mode !), disk encryption is about keeping confidentiality of the data as itself, so encryption has to occur "somewhere" before actual storage, but it can be in the controller.
Of course, nothing says that the encryption is done properly. It is not exactly trivial to go from AES, an algorithm which encrypts 128-bit blocks, to a system which encrypts a whole disk, without leaking information on the encrypted data, while still allowing random read and write access. At least, the "attacker steals the powered down laptop" makes things relatively simple: we do not have to fear active attacks (the attacker does not give the laptop back) and there is no concern about chosen plaintext/ciphertext attacks as well. A simple CTR mode would be fine (I am not claiming that's what any SSD does, only that it would be how I would do it myself).