Over optimization can affect a lot of things. The number one thing it can affect is your users. The last thing you want to do is give your users the impression your site is spammy, low class or just plain junk. Even if you get a ton of visitors the chances of them converting is slim to none, therefore your site is deemed useless. The best thing to do is to mix up your keywords with compelling content that grabs the users attention.
http://redfoxseo.com/2009/10/over-optimization-and-no-follow-tags-in-google/