It depends what you want to do.
If you want to just play albums, and have an artist/album/tracks style sirectory structure, then there is no need for the database.
However if you want to create playlists by genre, or year, or... then the database can be useful.
Personally I do not use the database, and would abhorr being forced to use one - that is one of the reasons (ignoring superior hardware etc.) I originally bought an H100 and not an iPod (this is before rockbox ran on the H100s). However, having the option is useful for many people, especially if they insist on using something like itunes with it's stupid renaming and mangling of firectory structure (or have to use itunes so they can still use the OF).