Nope..research has shown it's very good for them. SIDS risk is high in babies who sleep alone but it's also been found even if baby is not crying that they are stressed when not with a parent. Stress releases cortisol and too much of this can seriously affect brain development. It's only in the past 5 year or so they've really known this. All that spoiling, manipulating stuff is just society having unreasonable expectations of a baby's behaviour.
If you read the book or site suggested above (Primal Health by Michael Odent also covers this and 3 in a bed by Deborah Jackson is very interesting) there is more info on it.
This article also mentions it
http://www.timesonline.co.uk/article/0,,2087-2 179265_1,00.html
Touch is also very important to create positive paths between the billions of neurons that are connecting up. How you treat a baby affects them for the rest of their life.
By becoming an attached responsive parent you create secure children who are then confident and independant.
I cosleep with my 3rd son who is 15 weeks now and get plenty of sleep, I co- slept with my middle son too. They don't stay in your bed forever..one day he just decided to go in his own bed. No tears and no stress.
Waking up too that yummy smile is a perfect start to the day too!