I'm not sure about how much it affects tq/hp, but I can see how it would have a big effect on cylinder pressure, detonation, and tendency to blow head gaskets. A tuning guru would have to say for sure, but the talk about "high timing" and "low timing" chips tells me that a few degrees can make a difference. If your timing ring was 4 deg off, and your chip guy set the WOT timing at 20 deg, you might actually have 24 deg (or you might actually have 16 deg, depending on which way the ring was off). How much that ultimately affects performance, someone else would have to say.
This could be part of the reason why some guys say they can run 20 psi on pump gas, while others can't get over 15.
I first heard of timing ring slippage from a guy that used to work at Conley's, they found that to be the root cause on a car that detonated once they got it up to 15 psi, no matter what they did to it.
John