All its doing is moving around files to clean up the system and making files easier to access when the computer needs them, so doing this can't damage the hard drive I wouldn't think, like you moving files round yourself (oh...as long as you don't move critical system files, but I better mention that defragging programs do know what their doing
I've heard rumours too though, but there is no harm in it I'm sure, like Setishock says.
I would though advise to run in Safemode while doing defrags, as it gives the computer more access to files which it might not be able to move in the standard Windows mode as well as if you switched.
If you don't know how to do this, just simply keep tapping the "del" while the computer is booting up and you'll hopefully get a menu, where you'll be able to select Safe Mode.
I hope this helps