Sort of. Challenging gyms is a lot of fun but you need to be relatively high level to have a chance.
There's also the rewards you get from leveling up, the new items you unlock at certain levels (great balls, ultra balls, max potions, max revives and so on) and the sense of accomplishment you get when you level up. Basically the whole game is a grind for exp and "catching them all" until you get to the good parts (battling gyms)
Also, you start seeing more powerful Pokemon as you level up and you're able to power up your Pokemon more, so it gets more fun as you go along.
Without leveling up, there wouldn't be much to do in the game at all.
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