I recently had the opportunity to sit in on a CRM session presented by Paul K. Ward. One of the points Paul made about data management is that bad data destroys value. That is, bad data doesn't just annoy your customers, it actually causes damage to any relationship you may have built.
Consider a company with which you have done business for a long time. If you receive a letter or email from them that starts "Dear Customer," what is the first thought through your mind? Your first thought is "I've been giving you money for how long and you can't even be bothered with using my name?" The result is that you're not just annoyed, but you start to see the company in a different light. A more negative light. And damage is done to the value of the relationship.
So the bad data in your database isn't just a nuisance; it's actually working against you.