Step bits are fantastic for metal, I would never even think about using them in wood. Their main purpose in my experience is to make a round hole. While it sounds like all drill should make a round hole you would be surprised what a twist drill will do to a piece of metal. Once you get up to spade bit/hole saw size they are less useful, unless you are opening up an existing hole, there aren't a lot of good ways to center a hole saw in an existing hole, you can get close, but rarely dead-on. Step bits leave a nice round hole with very little burr and that hole is centered on your pilot hole even if the "pilot hole" is 1".
My tool preference for buttonish sized holes (in order of preference):
Wood: Router w/template
forstener
spade
hole saw (many people would move the hole saw up that list, but I hate removing plugs.)
Metal: Punch
step bit
hole saw (see above for hole saw)
Plexi: Router w/template (either template on top w/top-bearing bit, or pre-drill with plastics drill bit for template on bottom w/bottom-bearing bit)
hole saw (in a press, no centering bit, work piece clamped and backed w/wood, forward (fast) rotation, very slow feed rate.)
I haven't tried a step bit w/ plexi, but it seems like a questionable idea.
I would work my way down the list if it meant I could stay on a stationary tool (with router being the exception, hand-held or table=better than most other options), making holes with handheld tools is just too touchy for my taste.