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It depends on the context and also on the person evaluating you.
To take it further, if you're thinking about how it impacts your work, then it depends on the job. In engineering we were told that your GPA didn't matter for too much (although being below certain numbers could keep you out of internship opportunities). On the other hand, the programmers (computer science) would have some issues if they had poor grades - rumors say that nNVidia will not look at an application if the GPA isn't near 4.0, and a friend of mine had to explain why he received a "C" in a class when he was interviewing with Google. (Google took him.)
I've heard mixed things from employers. Some claim that grades represent a person's committment to work through things that they may find pointless - a valuable asset. Others claim that grades do not reflect on a person, and that work experience (and recommendations) count for more. I can't say what the majority think, but it's clear that having good grades won't hurt you.
In academia at the undergraduate level your grades matter, but there are other considerations. What school you go to tends to influence how impressive your GPA is. A 4.0 from a small, largely unknown school will not have as much of an impact as a 4.0 from an ivy league school, for example (which is slightly ironic, given that it's been shown many ivy league schools engage in GPA inflation. On the other hand, having taken summer classes at a relatively small school and comparing it with my university, the classes were much easier - or maybe the professors were just better - so there may be some merit to that idea.) Unfortunately, it seems rare to find people from an admissions committee who understand the other factor, which is course of study. I mean no offense to the English and History majors out there, but a 4.0 there is not as impressive as a 4.0 in Engineering or some of the sciences. Many admissions committees are merely responsible for showing that "the numbers of our admitted students just keep going up - we're more competitive now!" which explains why they're more interested in the number than in the coursework itself.
Going back to your question and title of the thread, GPA is overhyped in many situations, but it's a deal-breaker in many aspects of progressing through academia. Of course, it doesn't have to be. Experience and charisma count as well. (A bit of luck also helps - knowing the right people in the right places and contacting them at the right times.) People like numbers because it presents a one-sided view of people, which makes it easier to evaluate them. Life is much more variable than that, though, and it shines through quite frequently.
I'm currently in a graduate program in the biological sciences, and the academic environment does change pretty drastically.
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