PDC without DNS Server

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    I have a work group of 20 computers running XP Pro with SP2. I have installed Windows Server 2003 and added 3 computers to the domain just to check the things. I have not configured DNS on win 2003 server so clients take 2-3 minutes to login. I have Kerio WinRoute firewall on separate machine for internet bandwidth management as well as DHCP server. My main purpose to add win 2003 server is to automate backups of document folders, emails and other important data folders to one central place through third-party software. My only concern is DNS server. Currently everything is working fine and all machines can access internet and each other. I have to ask few things from professionals.

    1-Is it necessary to configure DNS Server and Forward & Reverse Lookup Zones?
    2-I dont want to bring some machines on domain and I want to keep them on workgroup. Will I face some problems in future with this setup?
    3-I have SQL Server 2005 databases and IIS 6 & VB6 applications running on these 20 computers. Will these face problems without DNS Server configuration?

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