Everyone seems to be making valid points here. I'll try to answer in a way that tackles your confusion directly.
Now that's wierd as I know due to having KE, ie. having momentum, one can impart pressure. Then why distinction ?
Force exerted by this momentum must be looked at from two different perspectives: perpendicular or parallel to the fluid flow? As one can imagine, the force of moving fluid past you is different from fluid moving directly toward you. A fluid with KE will impart different pressures depending on where you measure it with respect to the direction of flow. In the Bernoulli equation it is implied that dynamic pressure is the quantity that is relevant when there is fluid moving along the surface that a pressure quantity is being measured (note: we are looking at the force on the surface which is perpendicular to flow direction).
Dynamic pressure is simply the pressure you would measure when the fluid has some orthogonal velocity component relative to the pressure probe (i.e. the fluid is moving relative to the pressure gauge). It has the units of pressure. It's measurable and not a fictitious number. To make it more clear, if the pressure gauge was moving at the same velocity as the fluid (no relative velocity between fluid and gauge), then the reading will increase and become identical to what you would call Static Pressure.
So the short answer is that we need the distinction because a pressure gauge would show a high reading when fluid is still and a low reading when it is moving.