IMHO the only reason why orphans are bad is because they are rising the efficiency-gap between miners/pools with slower bandwith vs miners/pools with higher ones which would lead to more mining centralization
but please correct me if thats wrong - its just my head trying to figure out p2p

edit: i have seen this happen live with an early p2pool version and bitcoin. p2pool has many many small blocks (they call them shares). my p2pool node was on my server - many have run it at home. i had WAY less orphans and was much more efficient (to a point where i was more efficient than i should be - effectively stealing some btc from people with a bad connection - i stopped mining there then [well i completely stopped mining btc and sold my two remaining gpus]).
It's not the only reason but it is one reason, and its a huge one. Decentralization is the entire reason for these coins to exist at all. Without that the entire system is a huge waste of resources.
It also increases resource use (especially for lightweight wallets) and makes the network less resilient to failing altogether.
A common change in altcoins is to increase the block frequency, due to a misunderstanding of the purpose and meaning of transaction confirmations. This increases the frequency of minor blockchain forks (which result in stale blocks and wasted mining power) and also increases the bandwidth and validation costs of non-mining nodes. Both of these tend to increase centralization.
If the block frequency is very high, new blocks will be produced faster than blocks can be transmitted and verified. This destroys consensus since nodes are essentially always seeing competing blockchains in the past. (Remember that consensus time is measured by total blockchain difficulty, roughly, blockheight.) Therefore the first chain that they see will always appear longer than the others, and every node will have a different idea of the best chain.
This happened to feathercoin, which had 60-second blocks. They were unable to achieve distributed consensus, so the network was changed to require developer signatures on all blocks.