What are the benefits of enhancing Steal on a Thief? Do they steal better items ?

All it does is increase the chance of stealing. The items you can steal from each enemy are decided the moment you load the quest. each enemy can be loaded with 1 of 3 different items ej: Wolf has Potion(Common) , Hi Potion(Rare) and Wolf fang(Very rare). each item has a different rarity and the rarer it is, the harder it is to steal from it. upgraded steal will allow you to steal from enemies holding rare items such as Wolf Fangs, ogre Bristles and in the case of human units you can steal Jadeites, Azurites or Charoites.