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I am from India and I can tell you why yoghurt is used in spicy curries.Ofcourse I am a vegetarian but this applies to all spicy curries.

Yoghurt is used to calm down the spices added in your curry. It brings a new juicy sour flavour which many people relish while eating. If you don't add yoghurt there is a possibility of you spitting fire from your throat(I mean the spices may burn you).Generally yoghurt is added at the end of your dish preparation(as you mentioned),see that you don't spoil the taste by not beating it smooth or over adding it.