I see that CA's are now giving the option of having the root CA cert signed with SHA2. I have been told that the hashing function in a root has no security value, and is irrelevant as far as a collision vulnerability because the cert lives in the trust store of the host system, so it requires no verification, and faking one would be pointless in that respect. So why are CA's now giving this option? Is this a security measure in case the CA itself is compromised to prevent attackers from issuing fraudulent certs?
No. It's irrelevant, although it's better that they don't use weak root signatures. I think the setting may refer to the intermediate CA instead.
Remember that from 01/01/2017 Microsoft will start rejecting SHA-1 signed SSL certificates, and Google will degrade the security level indicator for those sites with a certificate which is valid after 01/01/2016, and even if it is valid after 01/01/2017.
These SHA-1 rejections mean that the whole trust path must be using SHA-2, and that includes the intermediate CAs. OTOH, if you still want https: to work on Windows XP systems, its Internet Explorer won't be able to validate SHA-2 signed certificates. I guess that's the reason they let you choose, instead of simply using a SHA2 root CA.