Why Instruments? (PDF)
Sailing instruments do not replace your senses, they enhance and validate them. They also provide information about things you cannot sense directly, e.g. true wind and current. They are vital for comparing performance with target speed, calculating time to laylines and many other items crucial to increasing your probability of winning.
Boatspeed is certainly an important item to keep tabs on, but for racing, nothing beats true wind speed and direction. (What is true wind?)
Onboard the boat, you can sense the apparent wind
boatspeed, but not the true wind. Integrated instruments use
trigonometry to calculate true wind speed, angle and direction.
Apparent wind includes boatspeed and heading, so it
depending on current performance, e.g. during a tack. On the other
hand, true wind is God’s work and won’t change
what you’re doing at the moment (except maybe praying).
There are a lot of very inexpensive products that use GPS alone to try to monitor performance. A good example is the Velocitek unit. These things can show you your speed (over ground) and have nice post-mortem playback features. However, they don't sense wind, so they infer it from tacking angle. There are many subtle and not-so-subtle issues with this. Rather than going in to detail, here is a white paper on the subject.