In response to the question Basic Training for working with 120V AC zebonaut had replied that "A regular wall outlet is referenced to earth" and this provides the close loop for the circuit to complete. Also it was stated that for safety if an isolation transformer is used the current will have to flow back to the transformer and you won't get shock by touching with only one hand. So why don't the power supply from electrical utility come from an isolation transformer? This way won't there be less risk of electrical shock from electrical appliances ?
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You don't want your whole house electrical system arbitrarily floating. First, just a tiny leakage or static electricity could charge it up to high voltage. The whole system would have enough capacitance to ground so that the discharge could cause damage.
Then what if any of the three lines were accidentally shorted to ground? You wouldn't know anything happened if one of them got shorted, but suddenly other parts of the system are at lethal voltages.
Here in the US, there is a final transformer near your house, often on a utility pole at the street in front of your house. That makes center tapped 220V from whatever the higher voltage feed on the utility pole is. These are left isolated on the pole and all three lines brought into the house. The center tap is then grounded with a thick cable to a copper pipe that goes into the ground, or to a ground stake just for that purpose. This leaves two phases of 110V with opposite polarity. Most circuits are connected between one of the phases and the center, called the "neutral". A few special high power circuits, like for a clothes dryer or electric range, are connected accross both ends and are therefore 220V instead of the usual 110V.
Part of the reason for the ground setup it to deal with lightening as best as possible. The system is grounded as closely as possible to the breaker panel in the house to minimize the common voltage on the system due to ground offset. Imagine what would happen if the transformer secondary center tap were grounded at the utility pole instead of your house, and there was a nearby lightening strike. There could easily be multiple kV offset between where the center tap ground and the actual ground potential other things in your house might be connected to, like the concrete floor you're standing on in the basement, water pipes, etc. Even well insulated and properly designed appliances aren't going to protect you from that.
Because any real transformer is not an ideal insulator. There is always several hundreds or thousands picofarad of capacitance between primary and secondary windings.
If you will not ground the secondary winding, then on all secondary outputs you will have floating 60Hz AC voltage of about half of primary voltage, say like 5500 volts relative to earth.
And, yes, on top of simple first order effects there are dozens of safety, regulatory, cost, environmental and other aspects.
Without a ground reference, there would be a very high risk if the high voltage primary of the utility pole shorted to the low voltage (120V or 240V) secondary - thousands of volts sent to your appliances. With a ground reference such a short will blow a breaker on the utility side.