or £1.99 or any price that end in .99.

Why do they still bother doing this?

I've heard 2 theories as to why shops do:

1) the psychology of something costing £4.99 means people are too stupid to realise that it is actually £5.

2) It forces cashiers to open the till to get the penny change. If everything was a round number it would be easy for shopworkers to pocket the pound coins and notes without ringing it through the till. (I actually know a guy who worked in Mcdonalds and kept a pile of pennies in his pocket at all times and gave customers change out of one pocket, and put the pound coins in his other pocket).

Which is true?
Can someone ban this sick practice please?