Damage to the propeller blades can cause multiple problems.
The truth is that propellers are a precisely engineered and machined part on your boat. It's where the rubber hits the road... but on the water. Prop damaged, no matter how slight, will reduce performance, consume more fuel and lower your top speed. With gas prices being what they are, that's something that no boater wants. Replacing a dinged prop will reduce drag and help the motor's efficiency.
However, this isn't the worst part. Any ding or bend on propeller blades will throw the prop out of balance. This can sometimes be felt with excessive vibration. An unbalanced prop puts a lot of wear and tear on the lower unit, especially the carrier bearing and seal. If you don't take care of the seal and it leaks, the lower unit can be damaged permanently.
Lower units are expensive, and breaking down on the water can be outright dangerous. When a boat motor breaks down you can't simply walk for help. Depending on where you are boating, a break down could involve flagging down a fellow boater for help or much more serious safety issues. And let's not forget the bill if a tow is necessary... tow boats charge from when they leave their dock until you get dropped off.
By inspecting your prop regularly, you can save in the long run. All damage to your propeller decreases efficiency and can result in engine damage. iboats.com has a complete selection of replacement aluminum and stainless steel propellers.