It only matters if you use Photoshop to do color critical stuff, like prepress. But if you were doing prepress stuff, you'd know about color calibration already, and you'd probably be using some high-end monitor as well. In other words, for the average person, it doesn't matter one bit.
BTW, since you asked what the color profile does, I guess I should tell you that, too.
Anyway, each model of monitor may have slightly different color properties. For example, one might lean slightly toward accenting greens, while another might be a bit more bluish. (actually, each individual monitor is not exactly like the next one, even within the same model, so that's why Photoshop installs an Adobe Gamma Correction Utility in your control panel - so you can customize a color profile for your individual moniton). So, the color profile basically just tells programs that know how to use it what the properties of your monitor are, so they can adjust the way an image is displayed to show it to you as its designer intended.
Color profiles also are used with scanners, printers, and sometimes digital cameras as well. They are supposed to make the colors of images truly "WYSIWYG," although in my experience with non-professional scanning and printing hardware, they don't really work that well.
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