Generally the main reason for removing the battery is to reduce the heat from it. The battery life may be reduced slightly, but not to any significant extent.
The problem with NiCd batteries that
8210GUY explained is the memory effect, meaning that if the battery isn't discharged completely before being charged or left in the charger too long while not charging, it will loose battery life.
Fortunately, NiCd laptop batteries aren't very common anymore.
