It is there to allow the air to escape. If it wasn't there, the air could only escape from the bottom edge and this would cause the chute the oscillate back and forth. This oscillation could become so severe as to collapse the chute. So essentially it stabilizes the chute.
The hole is only there on the circular chutes, to prevent oscillation as previously posted. The wing type pararchutes are desined to direct the flow past a trailing edge so they don't need holes. Some wing type parachues will use openings on the leading egde to inflate an thick air foil shape.