When a program on your Windows XP or Vista system crashes or becomes unresponsive, the OS will bring up an alert box asking whether it should report the crash to developers. The data it sends is composed of a memory dump at the time of the crash for use in debugging. If you choose to send Microsoft the error report, the data will be delivered to a server where it is aggregated and supplied to any involved software and hardware developers. If your issue can be identified at the time of report and a fix is already available, you'll get a link to the fix.

An Internet Explorer crash alert

Does it help?
If you've hit the Send Error Report button enough without getting any response from Microsoft, you may feel like your data is going into a big black hole. This is far from the truth. Microsoft has reported that error reports helped them fix 29% of errors in Service Pack 1 and more than half of the errors in Office XP Service Pack 2.

If you find these error reporting requests annoying, you can turn them off. Go the Control Panels > System and click the Advanced tab. The Error Reporting button will bring up reporting preferences. You can enable error reporting for Windows, all programs, specific programs, or disable error reporting completely.

Error reporting controls

References:
http://support.microsoft.com/kb/310414
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