So I did a test today and noticed a few things.
First, disabling this setting does disable push e-mail. After 10 minutes at idle (screen blank), I sent an email to my gmail account, and where the message would usually show up 10-20 seconds later on my phone with it enabled, it didn't show up until I woke of the phone after 5 minutes of waiting.
Another thing I wanted to test was Google Talk. When I get home from work I'll try it out, but I suspect that it will disconnect you after a certain amount of time with the phone on idle.
However, programs that have a scheduled update time still update at those time intervals (weather for instance).