I'd say that a jackass active on the site is more damaging than one banned. If you ban someone, you have only upset one user. If you allow a spammer/troll/flamer/etc to continue unchallenged, you have upset all of them.
The thing with online communities is, this is Web 2.0, your users are your product. The better the users, the better the product. If you have a good community, smart, helpful people will be attracted and will thus improve the community. If you have a bad one, they will be warded off. Scum breeds scum.
Think broken window theory.