if you're using an automatic gun you're not going to try and take your shots
Then you're not thinking.
Let's try real-life, where all weapons do 100 damage most of the time, and there is no invuln. The only reasons to go full automatic are:
1) Suppression. You are killing the shit out of terrain to keep someone from having a second to look, aim, and fire back.
2) Gangsta driveby bullshit that is more about intimidation and getting away with random assaults/murders.
3) You're dying/doomed anyway so you go Rambo for your last seconds on earth.
"People die to fast" is valid because we allow LTK, which is defined by "people die to any successful attack." Invuln allows for dogfighting, which is fun to watch and fun to play, despite being unrealistic. Hence, all gun battles in cinema except for serious war flicks.
There is a very obvious purpose to the SMGs in Goldeneye Source. Whenever you don't need max damage, or whenever you can't afford the time you need to aim, spraying bullets will work. SMG combat is all about finishing weakened players ASAP without needing to sight or be certain of your aim. Unless it's pro-magnum, no one typically goes around with pistol over an SMG in Goldeneye Source when they have an SMG. The SMG's first shot is often on-par or better than the pistol's first shot, and proper bursting ensures that when you miss, you often get body or limb damage instead of zero damage.
Anyway, we already discussed this in live voice chat, so I shouldn't need to elaborate much further. Invuln directly nerfs no-skill spamming while rewarding disciplined weapon technique.