The mushrooms are used for the recipes at the Harvest festival (Thanksgiving). They can also be sold at the store. The red and white dot mushroom when eaten makes you grow huge for a couple of seconds. Some players also use them for decoration.
For the most part I have been selling my mushrooms, since I can get some good prices generally. Although, I can always get more bells from anywhere else. Placing them around town would look nice either way.
I love decorating my town with mushrooms, rather than selling them, since it's not like they just grow on trees (hahaha.. wow.) I'm storing up round mushrooms & rare mushrooms for now, since I don't like how they look as much as the other shrooms. I'll probably save those for the harvest festival, although I may change my mind come November...
I think everyone already said everything except one thing: combine 3 gold ores per piece of furniture with Cyrus & pay 10k bells to get gold furniture.
For mushrooms, people use them for decorating their towns, but I just eat them for effect ) I didn't know about harvest festival though, merp, better start saving up on them