No, it won't damage anything.

You are right, VANOS is a cam timing mechanism. It alters the valve timing
to produce more torque at low speeds. Without it, all you will notice is
flatter engine response.

On a 3 Series, this might not even be noticed by most drivers, but the added
weight in your 5 Series may make the flat response noticable, and I assume
undesirable.

The VANOS unit isn't very complicated, but the Cam Assembly is with some
significant chains attached, and a special tool to hold the cams in place
while the VANOS (and chains) are replaced. (I think you would be wise to
replace the timing chains if you are going to replace the VANOS unit.) The
unit isn't all that expensive, but the labor will run to about 6 hours, I
think.

If you feel no driveability issues without the VANOS, I see no reason you
can't drive without it. The only problem you should notice is in low-end
performance -- starting off from stop signs and lights, that sort of thing.
Once you get to freeway speeds, VANOS is done anyway, and you'll never know
it isn't working.

Sounds like BS to me.

Does this describe the problem?

"It occurs on cold weather cold engine starts and takes the form of
repeated engine attempted stalls and possibly a complete engine stall.
The engine rpms drop dramatically and then recover. This then repeats
after a few seconds of steady idle. The problem can be more definitively
diagnosed by disconnecting the vanos intake or exhaust solenoid
electrical connector. If the engine stalls cease then the problem is due
to the vanos."

If so, then yes, you'll have to replace the entire VANOS because a
couple of rubber seals have worn out:

http://bimmer.roadfly.com/bmw/forums/e39/7494631-1.html

That said, driving with the VANOS solenoid disconnected won't hurt the
engine, only performance.

Lemuel Johnson