No you do not need it. The one issue is if you stall the bike you will only be able to start the bike in neutral. Scenario: you stall taking off in an intersection, you may fumble getting the bike back to neutral in a hurry to start it back up as opposed to just squeezing the clutch and starting the bike in gear as normal.
Or.... you could bypass the switch so that its permanently active. This would allow you to start the bike without having to fiddle around. Its also means there'd be nothing to prevent you from starting the bike in gear.... along with the resulting embarrassing kangaroo lurch.
The switch is there to try to make the machine a little more idiot proof.... I have had many bikes with no such safety interlock.... you just need to be in the habit of ensuring that you have the thing either in neutral or have the clutch lever pulled in before you hit that button.
