droop basically causes your CPU to constantly draw more voltage than it needs to at idle so that it can be fed the correct voltage at load, because the droop happens when you are at load. So when you're idle, it is over-volted... much more than it needs to be. Hence, doing a vdroop mod makes it so you can set a lower Vcore value in BIOS, since it doesnt drop at load, so you dont need to overshoot it like you would if it did drop because of vdroop. This results in both a savings of overall lifetime of the CPU when you overclock as well as a lowered idle temperature.
Increasing voltage not only decreases the life of your CPU (not by enough to care, unless you really plan on keeping that cpu for more than 5 years) but it increases the amount of heat given off by the chip. This is the main reason for the vdroop mod, to stabilize the voltage so you aren't running super hot at idle.
The P5K deluxe had a BIOS driven vdroop manager that worked QUITE well. The P5B, unfortunately, still requires the pencil mod. Looking back, if I didnt have the P5K Deluxe and instead had the P5B, i would have definitely done the pencil mod.