Depends on the cell type. Nicad typically does not display long term damage from being drained low. This is why nicad manufacturers used to (they might still; been a while since I checked) recommend that you drain the cells to .9/cell before storage, and every once in a while completely drain the cells with an equaliser tray (such as the Trinity RealTime2 tray), just before charging. They tend to display "memory" from not having a full charge cycle (again, my experience).
Nimh, on the otherhand, will sometimes go into "reversal", where the cell will be completely drained and not take a charge. They must be stored with at least a 40% charge and cycled every once in a while (at least once a month) to prevent the cells from going "negative" (this is also referred to as "memory", but in due truth, it's from the chemicals in the cell not working as they once did).
I have noticed (personally) that nimh will self-discharge over time, which leads to the cells going negative if they're left for a long time. Nicad, on the other hand, has a tendency to bounce back (to a point) to around 1.0v, if left to set for a long time.
Again, these have been my experiences; they may not be in line with manufacturers' recommendations.
To prevent the cells from going bad, use 'em or lose 'em!
