Catherine Pepinster: Where else can you pinch Kylie's bottom and kiss the Queen?

In 1890 Tussaud's bought a murdered baby's bloodstained cardigan and pram and the sweet it was sucking when it died

The waxworks are in meltdown: Madame Tussaud's is having a clear-out. Foreign politicians, monarchs from overseas and the Middle Ages, and members of our own Royal Family - including Princess Anne, Prince Andrew, and the Earl and Countess of Wessex, are being dispensed with. Instead, just a triumvirate of living Premier League royals - the Queen, Prince Philip and Prince Charles - will be on display beside the pop idols, movie actors and B-list soap stars.

It's tempting for republicans to assert that Tussaud's should put all the waxy Windsors on the scrapheap. But what Tussaud's is doing with its display deserves a little more consideration than that. For more than 200 years, Madame Tussaud's has purveyed pleasure to the masses, with an acute understanding as to what can pass for entertainment. The emporium's slogan sums it up - "to mingle with the mighty". Two million people a year still want to do that - even if the closest they get is by rubbing up against their waxwork dummies.

One of the benefits of having fewer Royal effigies, say Tussaud's, is that people can get closer to the ones remaining. Today you can touch and feel as well as look. You can stand beside Prince Charles and slap the Duke of Edinburgh on the back. Yesterday, people were kissing the Queen on her waxen cheek. And squeezing Brad Pitt's butt, whispering in J-Lo's ear, and pinching Kylie's bottom. They were ranting at Tony Blair and, thanks, to a new form of interactive presentation, debating with Dubya. It was fake, but they loved it.

What Madame Tussaud's has long recognised is our desire to gawp at the famous and infamous, as well as the vicarious pleasure of other people's misfortunes. It's what drove people to watch past monarchs eating, to seek out the madmen of Bedlam, and be tricoteuses at the guillotine. Madame Tussaud herself made a career of hovering about the guillotine, collecting the heads of the executed and taking death masks of the murdered Bourbons. When she first came to Britain, Madame Tussaud made her waxworks a travelling spectacle, displaying effigies of historical figures in an attempt to persuade the middle classes she provided a more respectable show than those of bearded ladies and performing bears. From the start she knew the power of royalty, commissioning an exact replica of Victoria's wedding dress in which to dress her dummy of the diminutive queen. The relationship between the royal family and Tussaud's has always been mutually beneficial; its display of Victoria was said to have assuaged the public's annoyance at Victoria's disappearance from public view after Albert's death. Today, the royals still return favours, always agreeing to sittings. A waxen William is likely soon.

Tussaud's, like its founder, has an intensely pragmatic approach to business. That's why it likes royalty, and why it also has no truck with priggishness. Madame Tussaud always knew the public likes, well, the nastier side of life. Any of us who went as children to Tussaud's remember, not the medieval kings and queens but the murderers of the Chamber of Horrors. Madame Tussaud and her descendants happily paid for the artefacts of crime. In 1890, for instance, when Eleanor Pearcey went on trial for killing her lover's wife and baby in her sitting room, Tussaud's bought the furniture, the bloodstained cardigan, the pram and the sweet the baby was sucking when it was killed. Tussaud's horrors have also had a fascination for the psychopathic killers they make their speciality: the Yorkshire Ripper, Peter Sutcliffe, particularly liked the ghastly anatomical waxworks on display in Blackpool, while historian Pamela Pilbeam's recent account of Tussaud's revealed that acid bath murderer John Haigh paid a visit to the Chamber of Horrors the day before he was arrested in 1946.

In some ways the appeal of Tussaud's today is really very odd. In the days of Hello! and OK!, virtual reality and the internet, with as many depictions of celebrity as you could possibly want, it's surprising anyone would want to visit a collection of not always very accurate effigies. But their creepy awfulness is unmatched. It panders to our voyeurism and is the mirror that royalty and celebrity deserve. That's why the popularity of the waxworks will never wane.