This is not true - on every rehat system since 8.0 I've been doing this. No machine had reduced funtionality because of it. In fact, the opposite happened. Try for yourselves, then tell me.
Interestingly, this explains a strange error I started seeing around RedHat 8.0 finally. It would happen when I'd try to do remote administration (for example 'sudo reboot' on a remote system).
Since there's now some stupid 'userland' version of reboot in /usr/bin/reboot that tries to be all fancy, and because I kept /usr/bin before /sbin in my PATH, I've been running this new version by mistake, leading to problems like the following:
[bevan@wallace ~]> sudo reboot X11 connection rejected because of wrong authentication.
If I make sure that /sbin comes -first- in my path, I can go back to running 'sudo command' like always.
[bevan@wallace ~]> sudo /sbin/reboot Broadcast message from root (pts/0) (Wed Jan 14 17:36:35 2004): The system is going down for reboot NOW!
I can see how it's supposed to make those 'You must be root' commands friendlier for a general desktop user in their console Xsession, but it messed things up a bit for us old command-line remote administrators.
I very much prefer distributing root-access through sudo, rather than distributing the root password.