This is not necessary, but recommended. By showing your server signature and full server tokens, you are providing potential hackers with an easier way to determine how to hack your system. For example, with ServerSignature on and a full ServerToken, the hacker will know exactly which OS (including version) and server technology you are using.
Example. With a full set of ServerToken you can get:
Apache / 2.2.8 (Ubuntu) PHP / 5.2.4-2ubuntu5 with Suhosin-Patch Server
With its installation on prod you only get
Apache
This slicehost article gives a good overview of how to approach serverSignature and serverTokens.
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