Richard Drawhorn has written a good article for the MarketPosition Newsletter that sheds light on the problem of duplicate content and how search engines deal with it.
If search engines detect duplicate content on your web site, it can hurt your rankings because they consider it a form of spam. In his article, Drawhorn reviews some of the ways duplicate content may appear on your site and a few strategies to avoid being penalized by search engines.
In general, the rule of thumb to follow when creating content for your web site is this: The same content should never be available from more than one URL. Very simple.
If your web site violates that rule, then your rankings in the search engines will suffer. You should get rid of any blatant or obvious violations of this rule ASAP.