This is what does the damping to control harmonic vibrations. As the assemblies get older, the rubber ages and cracks up from heat and eventually the two metal pieces cease to be bonded together -- it can happen more quickly if an oil seal or antifreeze leak allows fluids onto the rubber. This is an especially big problem on classic SAAB 900s, whose harmonic balancer sits at the firewall end of the engine, just above the place where the headers meet the catalytic convertor, a very hot spot indeed.

Addendum: some late model M-B motors (the V6s?) got some defective balancers, but I think that yours is far too old to be involved in any recall or extended warranty.

I worry about some of the late model BMW cars which achieve incredible smoothness with what they call a "dual mass flywheel" which potentially puts the same problem at the transmission end of the crankshaft, but I haven't heard of any big panics yet.