1) John was baptizing for he was a prophet who was saying the world was unclean, the world must be prepared for the Messiah, which in his mind was an apocalyptic event. Early Christians wrote that he was the forbearer of the one who comes after, and that he paved the way of Jesus. (John 3:22-36).

Now on Earth he would receive no authority to baptise, he was outside the realm of the King as well as the Priestly Class. In Ancient Israel there were 3 groups of people who supposedly spoke with God's will, the King, the Priests, and the Prophets. These people had different interests and when one gained power the others lost it. The prophets were the crazy guys in the wilderness denouncing the king and the priests saying that these people sin or errored. Of course the kings and priests would then reply that these were false prophets or have the prophets arrested (such as King Herod while a roman authority arrested John the Baptist who denounced the King's marriage, for the King married his dead brother's widow.)

2) On the reason that Jesus needed to be baptised even though he was without sin. Look to Matthew 3:15 (part of the greater 3:13 to 3:17 passage.)

"Jesus replied, “Let it be so now; it is proper for us to do this to fulfill all righteousness.” Then John consented. "

Here is the original passage in greek
http://biblos.com/matthew/3-15.htm
And specifically the lines "fufill all righteouness." Now while I ain't a greek scholar (bring out Tom for that,) according to the internets
πληρῶσαι πᾶσαν δικαιοσύνην.

1343 dikaiosýnē (from 1349 /díkē, "a judicial verdict") – properly, judicial approval (the verdict of approval); in the NT, the approval of God ("divine approval").

A) So Jesus was baptized either to be seen as correct in society, for he has done "the motions" or
B) Jesus was baptized for he must fulfill this ritual as many other rituals to make God happy for doing so would be part of his fulfillment of his life mission, God's mission.