The usage types allow VM to make assumptions on the volume contents. fsgen assumes that there the volume contains a file system and gen does not. When using VM snapshots, VM will issue sync commands when its breaking a mirror off a fsgen volume. It will not do this for a gen type. Usually there is no real harm in having a file system on a gen type volume but some VM commands will use this field. With vxassist the default is fsgen.
Also check out the contents of /usr/lib/vxvm/type.
BTW, you cannot change the usage type on the fly.