Its a mixed blessing ...
There are publishers (like Nintendo) who will delay most important games to make the game great rather than good; there are also other publishers who will only delay a game if there is a fundamental problem with the game. The Legend of Zelda: Twilight Princess and Lair represent the ends of the spectrum of highly anticipated games that see multiple major delays, one is considered one of the best games ever released while the other is considered one of the more overhyped games of the generation. In both cases the delays benefited the final product, but one of the delays was obviously a sign of bad things to come.
Some delays are driven by marketing ... A game can be delayed (or see a longer delay) because its completion falls in a slow time of the year (January through March), or it is facing tough competition from another game; third parties have delayed one version of a game in order to complete another version of the game and have them release together.
For a platform, delayed games worsen the immediate game line-up and may make the system perform weaker than its competition.