I discovered the answer and published it in a blog post. As it turns out, the fungus is prized in traditional medicines here, both Chinese and Tibetan, and brings a high price at market. It is believed to bring virility to the user, thus the nickname "Himalayan Viagra".
It only grows in the high altitude of the Himalaya and the Tibetan plateau and farming it has so far been unsuccessful so Tibetan gatherers head out to dig the things up every spring. Local people who harvest the worms add significantly to their income by selling what they find.
As for a souvenir, you might want to choose the lowest quality to bring home as a gimmick. The fungus can fetch very high prices so unless you're into practicing TCM for some ailment, I wouldn't shell out a lot of money for high-priced yartsa gunbu just to bring home to show friends. But it might be fun to buy a bit, soak it in water and serve as caterpillar tea. Your friends will definitely not forget this gift.
I used these excellent National Geographic articles as sources for this article.
Finkel, Michael. "Tibet's Golden 'Worm'." National Geographic. National Geographic Society, Aug. 2012. Web. 29 Nov. 2012.
Mott, Nicholas. "Caterpillar Fungus Has Anti-Inflammatory Properties." National Geographic. National Geographic Society, 28 Nov. 2012. Web. 29 Nov. 2012.