Why is NTP Important?

One of the best explanations for this issue comes from Thomas Akin, in chapter 10 of his book Hardening Cisco Routers:

Time is inherently important to the function of routers and networks. It provides the only frame of reference between all devices on the network. This makes synchronized time extremely important. Without synchronized time, accurately correlating information between devices becomes difficult, if not impossible. When it comes to security, if you cannot successfully compare logs between each of your routers and all your network servers, you will find it very hard to develop a reliable picture of an incident. Finally, even if you are able to put the pieces together, unsynchronized times, especially between log files, may give an attacker with a good attorney enough wiggle room to escape prosecution.

Additional information on this subject can be found at UC Berkeley, University of Wyoming, in Rik Farrow's Network Defense columns for Network Magazine , and in the Linux System Administrators Guide at the Linux Documentation Project.