As it was said before, there were already useful Bug-types.I'd bet my bloody buttchunks that Game Freak made Ulgamoth because they wanted a Bug-type that people would actually USE.
GF probably introduced the move Butterfly Dance because they wanted to boost the usefulness of the Butterfly/Moth Pokemon, which have been really crappy up until this point. However, even Butterfly Dance wasn't enough to save most of them, so they gave us an awesome moth that could actually abuse the move to its fullest.