Yes. With WPA-PSK, the pass phrase is the decryption key. If the attacker can recover the WPA-PSK phrase, he can:
- Impersonate an existing user.
- Sniff all traffic and recover embarrassing documents and plain text passwords from other users.
- Run the recovered WPA key on the capture log and recover the contents in unencrypted form.
- Inject spoofed or counterfeit traffic.
- Instigate denial of service attacks.
- Bypass all the firewall rules (because he's on the LAN side of the firewall).
- Provide business for network security consultants.
Note that with WPA-TKIP and WPA-RADIUS, the WPA encryption key is unique by the connection. There is no system wide common pass phrase. Therefore, the attacker would need to recover each key for each user individually. Since this is a temporary key that is rather long, changes often, and changes with each session, chances of recovering this key are minimal. Even if the key were recovered, it would not be useable for the aformented exploits.
You should read the references supplied by John Navas. There's quite a bit in there on how it all works and what can go wrong, go wrong...