Okay so I googled this and came across a really good answer. I'll quote it below and then give the link to the whole thread:
GreenV8S (Peter Humphries):
"The school physics books tell you that the coefficient of friction is a constant, but in reality this is an oversimplification. In the case of tyres, the coefficient of friction drops off as you increase the weight on the wheel. This is why you can tune a car's handling by adjusting the anti-roll bar, and also why you *can't* tune with anti-roll bars if the load on the tyres is too small (the vehicle is overtyred).
Because of this, the bigger the contact patch the more grip you can get. In a drag race, dropping the tyre pressure increases the contact patch area and increases grip. Even on road bikes you will see people dropping the tyre pressure to almost nothing for the absolute maximum grip down the strip.
BUT, when you look at lateral grip (side force) other factors start to matter. The tyre develops side force because of the slip angle between the tyre and the road. This slip angle means the tread is being pulled sideways by the road surface. At the front of the contact patch the deflection is relatively small. As you move back along the contact patch the deflection increases steadily. At some point, the sideways forces in the tyre exceed the friction between the tread and the road and the tread starts to slip relative to the road. When the tread is slipping like this it produces less grip on the road. Now imagine increasing the slip angle and imagine what effect this has on the side force. As the slip angle increases the sideways deflection builds up quicker so the front of the contact patch works harder. But more and more of the back of the contact patch is sliding and losing grip. At some point you reach a maximum point where more slip angle means less side force because you are losing more grip at the rear of the contact patch that you are gaining at the front. This is often referred to as 'breaking away' where you ask the tyre for more grip and end up getting less.
The longer the contact patch is, the more gradually this break away occurs. If you shorten the contact patch, the break away occurs more abruptly but you get more absolute grip at the peak. This is because there is less variation in sideways distortion between the front and back of the contact patch, more of the contact patch reaches maximum grip and starts to slide at the same point. Having a shorter contact patch also means you get less self-aligning torque so there is less feedback through the steering about how close the tyres are to breaking away.
When you fit wider tyres, what you're doing is making the contact patch wider and shorter for the same tyre pressure. This means you get a more abrupt breakaway but more grip right on the limit. The disadvantage is more expensive tyres, more tramlining and steering kickback, more wind and rolling resistance and noise, less grip in slippery conditions, a more abrupt breakaway to catch out the unwary driver and less warning through the steering about how close the tyres are to breaking away.
This probably explains why manufacturers tend to put wide tyres on high performance cars and narrower ones on ordinary family saloons."
http://www.pistonheads.com/gassing/topic.asp?f=48&h=&t=78848