Defraging is completely unnecessary. You can't even do it on some file systems for example.
The only time it may be important to you is getting your boot up files in order. You might cut down a small amount on your boot up times by lowering the amount of seeks your drive must do. Apps, well, time it with a stopwatch - you may get a 1 second increase if you are lucky, but nothing that you are likely to notice. Your system likely spends more time setting up variables/initializing during the bootup of an app than it spends loading it off the hard drive.
Defrag it anyway if you want. The best way to say it is - it won't ever hurt you, but helping you is debatable, assuming your system doesn't corrupt something during the defrag.
My 2 cents - defrag is a mixed bag. Kind of rhymes doesn't it? Way more credibility is given to it than it deserves is the best way to describe it.
-S
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