I'm using Windows XP and I hate the long start up time when I shut down and then turn on my laptop. However if I hibernate instead of shutting down it starts up much faster. Are there any harmful effects / disadvantages if I always hibernate whenever I'm done for the day instead of shutting down?
Hibernation is a good thing, as long as you have the disk space to accomodate for the hiberfil.sys that gets created in the process. You can find it in the root of your C: drive if you are curious how big it is. You will need to have all hidden and system files visible.
Shutting down every now and again and restarting is still recommended. Not only will it allow those pesky (but required) updates to be installed, but will keep your system in tip top condition.
Under XP, the OS will slow down over time, and eventually get unstable, but that can take upwards of a week depending on how much you use your OS. Reboot every so often, there's no real harm in hibernating over short periods. In a laptop, most components should be built with hibernation in mind, and HDD space is cheap, so the hibernation file shouldn't be a big deal (If it is, it's 2010! Get an external HDD, 1.5TB is the best GB/$ right now, and they're pretty cheap!)
In Vista/Win7, I can't honestly reccomend shutting down unless you have a good reason.
In theory hibernation dumps the memory to the drive and allows "almost instant" powerup. I personally don't care for it. It is aimed primarily at laptops and will create a file that is the size of your physical memory that you cant delete.
I say if you arent having any problems with it and like what it does keep using it.