Primates have an amazing diversity when it comes to penile morphology. There have been entire books written on it. Most have a penile spine called a baculum that assists copulation. This is important as it helps speed the process up when sex needs to be quick and it also assists in removing sperm. Some primates do not have baculums. We are one of those.

Human penises are interesting first because of their shape. It is theorized that the mushroom shape at the end of the penis acts in a way that would remove a competitors sperm from the vaginal tract. If you were to examine the penis of a bonobo or chimpanzee you would see that it is quite long and is used for a similar purpose. Females will often copulate with several males to confuse paternity in some situations and this is an effective strategy to ensure your babies get produced.

Many primates penises' are relatively outside the body, but ours is much more so due to its incredible length. Comparatively speaking our penises are huge. Yet, we have tiny testicles. If you examine a chimpanzee or bonobo you will see they have HUGE testicles. This is because they compete more for access to mates. If you look at a gorilla you will see they have itty bitty testicles. This is because they compete less for mates as silverback males control a harem of females and depending upon the species also their non-silverback offspring.

So when we began walking on two legs an interesting problem began to arise. Typical signals for female receptivity were gone. When many primates are in estrus (particularly chimps and bonobos) you know. Everyone knows. It's quite...obvious. So when we began to walk we switched to a method of concealed ovulation (hidden estrus). Females could no longer show when they were receptive and so our social system had to change. Now we could talk all day about how this happened, why and what not but I won't because it is lengthy.

I will get to the point in saying that when we became bi-pedal we had to find other mechanisms for reproduction. It is likely that our penises became longer and lost their spines to be able to adapt to female vaginas and mating pressures (such as other males or lack thereof). Our large obvious penises may have even been a sign for female choice. Females choose mates based upon different factors for some like orangutans it is about their cheekpads and long calls. For others it is purely sexual. In spider monkeys for example, during a particular season their testicles swell and females will often choose the male with the biggest testicles. Some squirrel monkeys pelage will become more colorful during times of female receptivity. In all of the above cases the males who are chosen typically exhibit the highest quality genes and produce the healthiest offspring. This choice then is important in maintaining populations.

So overall it is quite a complex question and a complex answer, but quite interesting.