This phenomenon was extensively studied by economist John Lott, who brought these conclusions to light in his classic book, More Guns, Less Crime. To say that he and his methodology came under severe attack by the academic and gun-control establishment is an understatement, but his data and methods were sound and have never been credibly challenged. If the reader cares to he may investigate this claim himself; a good place to start is with the data itself, and a presentation of the major criticisms of Dr. Lott's work and his replies to the criticisms, both available on his website linked in below. It can be heavy slogging (especially if advanced statistical analysis isn't your forte) but here's a clue: Dr. Lott shows you his data - you can download it; many of his critics don't share theirs.
So Where do we Draw the Line?
I think we can all agree that weapons of large-scale war should be legitimately forbidden to the general public. No one proposes that megaton bombs, for example, are legitimate in civilian hands, and I think that most of us similarly agree that even smaller military-only application weapons like surface-to-air missiles can be legitimately controlled. On the other hand, I think we can agree that weapons that can be legitimately used for self-defense ought to be allowed. Thus the litmus test for what's permitted should be "Is this a weapon that has legitimate self-defense use?" This gets us away from the "sporting use" test so often proposed by gun-control advocates (which, besides being nebulous - on purpose I believe - is also a complete red herring), and away from the loaded vocabulary of words like "assault weapon".
Now, here's where it gets a little politically incorrect (in some circles), but the logic holds: so-called "assault weapons" such as the AR-15 are by definition and by design individual self-defense weapons - that's why they are issued to soldiers and police officers for individual defensive use. (To keep it brief, I will skip here the argument that many "assault weapons" are indistinguishable in functionality from some traditional hunting rifles, and that many unchallenged hunting rifles are much more powerful than any "assault rifle".) To those that think that no self-defense situation could ever call for a small-caliber rifle with a magazine capacity of more than ten rounds, I'd suggest that they consider situations like social unrest (the LA riots, for example), social breakdown (hurricane Katrina, for example), persons targeted by gangs of criminals (people advocating unpopular political positions, or people who have to keep large sums of money at home or at their place of business). The list can easily go on.
Of course, between these two categories - handguns, hunting arms, so-called "assault rifles" and so on the legitimate self-defense end of the spectrum, and large bombs and mortars on the other (legitimately restricted) end - there naturally exists a gray area. I propose that weapons in that gray area (perhaps .50-caliber rifles might be at the low end of this gray area) be granted the benefit of the doubt, and only controlled if they in fact ever become a genuine menace to society's safety (not just used in an occasional crime, as every weapon is and will be).
But Why do You Need...?
One of the arguments that's often raised against the ownership of certain arms such as over 10-round handguns and rifles is "Why do you need (fill in the blank)?" Excuse me??? When did someone else's - let alone some bureaucrat's - opinion of someone's needs become a restriction on their right to own something? What does need have to do with the right to make a purchase in America? If someone wants a pickup truck, they should be able to buy one. If someone wants a large-screen TV, likewise. And so on - so long as the purchase per se doesn't physically hurt someone, then what right does any other person have to say that someone can't spend their money in the way that they best see fit. That's totalitarian!
But guns are dangerous, they say. Yes they are - that's their purpose; if they weren't they'd be no good at their intended self-defense function. But consider this: everyone on both the right and the left will quickly (and correctly) agree that ideas are the most dangerous of all things. Millions and millions of people have died as a result of an idea that they or their killers held. From our servicemen and women dying for the cause of freedom, to the Jews who died in the Holocaust, to the victims of terrorism to... well, you get what I'm driving at: ideas are the most powerful - and dangerous- - of human tools. If it's dangerous things that need regulating, than let's start the book burning ASAP. I'm serious here: the argument that guns (those appropriate for self-defense) need regulating follows the exact same logic as the notion that we should not let people read certain books or be exposed to certain ideas.