Not 100% necessary right now but as Android grows in popularity, it probably will be. I am using Lookout on my Evo and there is no battery drain or performance reduction. I forget it is running most of the time. Has a few other cool features like backup and locate services if you lose your phone.
I used Lookout on my BB Storm 2, and continue to use it with my X. No effect on the battery, our performance. On the BB you also had the option to wipe your phone if it was stolen. I would really like to see this option added at some point.