Yes and no !

To me Keith was a great character. I absolutely loved him and I adored him with Karen. Karen/Keith were absolutely brilliant and wonderfully written and they were so underrated. Not to mention that Keith was always there for Lucas both as an uncle/father but as a friend. Keith was pretty essential to that show.
One the other hand, the fact that he died did add something to the show. First, the whole storyline about it, the fact that Dan had always regretted it, that they thought it was Jimmy and also when Lucas finally discovered the truth... It made Keith even more lovable.

So, honestly, I don't know :/

Keith was a nice character and everything, but his murder was really important to the show. It wasn't so much about the loss of Keith (even though that did provide for a few good grieving heart wrenching episodes) but more about the fact that Dan murdered him. As important as Keith was to Karen & Lucas, Dan was much more important to the show. Dan killing his brother showed everyone (the audience and the characters) just what a sick bastard Dan was and the lengths he would go to in order to exact revenge. But it also acted as a catalyst for change in Dan's character. Dan was such an arrogant, manipulative, and abusive person that he needed something huge to happen in order for him to want to change. After Dan killed Keith, we saw Dan try to become a better person over the next 6 seasons (and more importantly, it took all 6 seasons to get him there!). It bothers me so much when characters like Victoria Davis and Paul Norris were awful parents for 20+ years and then suddenly change and become loving parents within 2 weeks for pretty much no reason except someone gave them a speech on being a better parent. Dan killing his brother gave him a real reason to want to change and he gradually changed over time.

This wasn't just a one or two episode story line. Dan killing Keith provided story lines for the next 6 seasons about how the characters (Lucas, Nathan, Haley, Karen, Deb, Jamie, Whitey...) related to and interacted with Dan, the guilt Dan faced, and how Dan struggles with trying to be a better person. If Dan hadn't killed Keith, seasons 4-9 would have been completely different.