On early levels this is one of the first buildings to upgrade, so that you can store up putty. The "Storage Silo" is probably the second most important building in your yard, next to the Town Hall. It holds some of your resources, so be sure to protect it from looters like Brains. Brains can easily take a Level 5 "Storage Silo" in a few hits, so be sure to upgrade your Defensive Towers. It should be protected nearly or as good as your Town Hall.
A good way to protect the Storage Silo is to make a Silo Death Trap to ruin an attacker's looting wave.
Once you have Outposts to store resources, you can recycle the Silos so that attackers don't get 5% per silo. It costs 3 mil storage, but once you have 30-40 mil from 7-10 Outposts, you can recycle the Silos without losing too much storage.