vsync is only used to prevent tearing, which happens when the card is rendering at a higher fps than what the monitor can handle. At some points, a monitor is halfway through rendering a frame when it finds a new frame in the framebuffer, and ends up drawing half of one frame and half of the other. This results in "tearing", when lines don't line up. Try turning vsync off, run an FPS (the game kind), spin around fast in circles, and you'll see what I mean.
vsync doesn't improve performance at all, only image quality. It kills performance in benchmarks since it prevents the card from reaching fps higher than the monitor's refresh rate. In games, though, it doesn't kill visible performance, since the extra frames that are discarded can't be displayed by the monitor anyway.
Since tearing doesn't really bother me, I just keep it off. In some games, though, it's quite noticeable