Google has a produced a nice run down of some common questions about Google Sitemaps. It's a very lengthy post but an important one and as such I've done a redux of the key points to understand.

• Sitemaps help Google discover all pages on your site, but does not guarantee crawling or indexing
• Sitemaps help Google discover information about your pages; when they were updated and their relative importance
• Sitemaps do not influence rankings, but can increase Google's awareness of pages which can lead to increased presence and visibility in the index.
• Setting the "priority" of all pages to "1.0" does not impact the ranking of pages, nor does the placement of URLs in a sitemap
• Penalties occuring after a sitemap submission are purely coincidental
• Sitemaps can be located anywhere as long as the site where the sitemap is located and the site whose URL are referenced are verifed in Webmaster Central
• Sitemaps need to be developed in the supported formats (syndication feeds, e.g. RSS or Atom, and Text files using the Sitemap protocol) and not in HTML. Google recommends the XML sitemap protocol
• Sitemaps can be used to indicate preferred URL for pages which contain the same content.

Related Posts on "Sitemaps" at Website Magazine:

So you want a Sitemap
The SEO Advantage of a Sitemap
Google Video Sitemap Generator Tool
Total Support for Sitemaps
Include a Sitemap, Get on Yahoo Site Explorer