formatting

First, absolutely not--formatting a modern hard drive is no different from writing a bunch of data to it. Absoutely impossible that it would cause any damage. I'm curious as to what poor, misinformed soul put the idea into your head--that's not an urban legend I'd heard before.

Second, while I've heard of a lot of people needing to do the same to keep Windows running properly, I've NEVER seen this as any sort of necessity with a Mac. That's not to say that problems can't crop up that require an archive and install, but if the computer is not noticibly misbehaving, don't worry about it.

If you had a hard drive that was nearly full, moving all the data off of it, reformatting, and putting it all back on does completely defragment the hard drive, but unless your drive is nearly full and/or you're constantly creating and deleting very large files (as in large Photoshop scratch files or several gigabyte video temp files you edit then delete), the chances are the disk isn't anywhere near fragmented enough for this to make any measureable difference.