You make a great point about people with messed up bodies but intact minds having a better chance of leading a fulfilling life.
I think it's better to be physically disabled than mentally disabled. Most people I speak to are more frightened of Alzheimers than they are of losing mobility when they get older.
However we don't really know what it's like for the person with a mental deficiency to live as they live. Maybe he thought it was a funny joke that other people just didn't get. I've seen the kids with Downs come into my workplace to do busywork sometimes and they do smile and laugh but of course they get bored easily because they have a short attention span. I helped out in a summer school once with lots of mentally disabled kids and most of them seemed like they were happy most of the time, they just weren't "normal" to other people. They've never known any other way of being, so like the Hensel twins adapted to working in unison to move their shared body, these kids adapt to the minds they're given, and function with what they have available to them. Just because we don't think we would be happy like that, doesn't mean they can't be.
I think it's our duty as fellow human beings to show them compassion and help them, and maybe it's their duty to teach us to have patience and other virtues. Do you believe every life has a purpose?
Regarding the (seriously) mentally retarded.. I don't think it is that significant if they are happy or not. Maybe a miserable one if he were able to contemplate his situation would prefer that over being happy and oblivious. "I think therefore I am". It's good that they do get alot of happyness during the day though.. they are under very good care.
Regarding the question.. do I believe that every life has a purpose..
There would be serving G-d
Making the world good (which is probably just something that follows from that)
But aside from that.
People often ask What is the point/purpose in life, and they come to the conclusion that there is no purpose.
The thing that often follows from that is "why do anything?". "no point".
The interesting thing though is that you can also draw the opposite conclusion, of "why not do anything" (provided it doesn't hurt anybody else, and it's not against G-d)
The implication of that is, that we can define our own purpose
(as great as that sounds, ultimately one tends to end up working daily and producing / providing / caring for a family! paying bills, saving for good healthcare. So most people end up with largely the same purpose, and very limited time for much else. But even given that, one can lead a life of purpose, and that is fulfilling)
Of course, this is all well and good. But What about the mentally disabled..
I think one of the things you said, suggests a very logical answer.. not too speculative..
You said that 1% of pregnancies goes wrong and a child comes out very wrong e.g. deformed..
If so, then for that one deformed child, 99 others will come out fine.
And if it wasn't him, it would be somebody else. It's a price that for some reason, G-d or just nature has made him pay, but that price serves an enormously meaningful purpose.
I heard a similar answer regarding earthquakes.
Similarly, natural selection seems harsh at the time, but a beauty of it is that it does help to ensure that the next generation has it better.
Just like cars produce gas emissions.
Soon with medicine we will able to treat deformed foetuses in the womb..
A bit like how we now have some cars that are solar powered.
Problem solved at source. A complex system has some costs to using it, some prices to be paid. But now it no longer has it, thanks to man's technological advances.
Modern medicine can already test parents to see if e.g. both are carriers of common genetic diseases. A bit like how modern science can help people avoid earthquakes. (large problem worked around..by avoiding the problem, though not solving it at source)
I wrote this post some days ago, I was tapping it into notepad or a JTF.ORG forum textbox, but there was a powercut for a moment, I was on a regular computer - not a laptop with a battery(effectively a UPS!) - and the computer went off and on, effectively resetting. It actually confirms my point. The electricity system is still used because it works, but there are these little(or usually relatively small) prices to pay for it to work! The price is always relatively small, if it was too high we'd all just give up on it.