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I've been using vBSEO on BigBlueBall.com and I'm very pleased with it. Prior to that, I had implemented an earlier version of Dani's SEO mod (of DaniWeb), it also worked very well, but... it didn't do a few things that vBSEO does (namely, allowing me to use the forum name as part of the path); the installation was a royal PITA (though I hear that's changed); and administration was nowhere near as flexible and powerful.
SEO-friendly URLs help ranking, period. But even if they didn't, I prefer them because they can be read by mere humans. When I'm scanning search results, if I can read the URL and get a sense of what the page is going to be about, I'm much more likely to click through.
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