Here are three scenarios which might show why it's a bad idea to leave your Registration Document in the car.
1) My name is Bob Smith. I am shopping in a large shopping mall and I have left my car in the mall car park, with the Registration Document in the glove compartment. A car thief breaks into the car, looks in the glove compartment and finds the document which contains my full name and my full address. It is the middle of the day and my car is in a shopping mall. There is a good chance that I am shopping in the mall. When I come back to the car park, I won't be able to find my car. I will be confused and I will spend a long time looking for it before deciding it has been stolen. Then I will spend a long time on the phone to the police and to my insurance company. All the time I am doing that, my house is empty and the car thief has my address. He can go and burgle my house!
2) My name is Bob Smith. On 1st April 2011, late at night, a thief steals my car from outside my house. He gets my name and address from the document in the glove compartment. He drives to the nearest motorway and drives at 90mph. The police stop him. They ask for his name and address. He says "My name is Bob Smith and I live at 10 High Street, London". They ask "Is this your car?" He says "Yes". The police run a check and the records come back confirming that Bob Smith, 10 High Street, London owns this car. They ask for his licence. He says "I'm sorry officer. I don't have it with me". They decide to give him a warning about driving too fast and tell him that he must report to a local police station with his licence and insurance documents in the next 7 days. He is happy to agree and he drives away. The police think he was Bob Smith, driving his own car. When I wake up the next morning, I discover my car has been stolen. 9 days later, I get a letter from the local police station saying "You were stopped for speeding at midnight on 1st April 2011 and were instructed to report to this police station with your licence and insurance documents. You failed to do so. You are now liable for arrest". This is the first that I, the real Bob Smith, know about the speeding incident. I will now probably spend a very long time trying to get this sorted out.
3) My name is Bob Smith. In my car is the Registration Document which I have to send to DVLA if I sell my car. On 1st April 2011, late at night, a thief steals my car and, for fun (!), decides to complete the part of the form which says "I have sold this car. Here is the name of the new owner: Mickey Mouse, 11 High Street, London". He signs the bottom of the form with a fake signature pretending to be me, he also signs a false signature which looks a little like M. Mouse" and he posts the form to DVLA. Even though I report the car stolen to the police and to my insurance company the next day, 2nd April 2011, DVLA will have a form dated 1st April 2011 saying I sold it to M Mouse. The insurance company will try to have me arrested for fraud because I appear to have sold the car and then, the next day, claim that it has been stolen.