To be very clear about this, I am in no way suggesting that setting your character as "Straight" will erase any LGBT content from the game. If a companion is gay, they will still be gay. I'm honestly not even suggesting that this would stop a gay companion from hitting on a straight PC. But your dialog option might change from, "I'm just into ladies, sorry" to "I don't think of you that way", for example. This was sort of a half-baked idea, and one that I posted at, like, 8 am local time before I went to bed (I work second shift), so I probably didn't explain it very well.
My thinking as to what the benefit would be is that it would allow the writers to add more details about the PCs life prior to you "taking over", as it were. Because the more details added the more real the world feels. As it is now, it's not really possible to, say, have a companion happen to be friends with someone you used to date, because the writers wouldn't really be able to define that character. Now, a conversation like, "Oh, you used to go to the academy? I used to go there to!" could happen. But, "Oh, you know Linda? I used to DATE Linda!" cannot.
Which is just one small example. I'm sure there are others, which is why I created this thread. I'm curious as to what benefits other people could think of to using this system.