They may not cause real damage if it's one here and there, but they do affect the leaf's ability to perform photosynthesis from my understanding, and if enough leaves are affected it could kill the plant.
I'm no expert, but have been reading up a bit on these, as I'm seeing quite a few signs of them at the moment on both the tomatoes and peppers. I've read that you can gently squeeze the "trail" and kill the lil beastie inside, but honestly, unless I can hear its scream of agony as it is crushed to oblivion, I don't trust it.
I sprayed with a mix that contains BT and will be alternating with one that has Spinosad on alternating weeks, just to make sure.
A note: When I only saw a leaf here and there affected, I would pluck the leaf and squish it up. Unfortunately though, I've gotten more affected and also have a caterpiller issue, so the spray was the most logical couorse to follow. If you only have a few, you can try plucking and crushing...