nesdev.org

(NOTE: On a real NES unit, if sprites are disabled (D4 of $2001 is 0)
for a long period of time, SPR-RAM will gradually degrade. A proposed
concept is that SPR-RAM is actually DRAM, and D4 controls the DRAM
refresh cycle).

From:

http://web.textfiles.com/games/nestech.txt

What is meant by this? Does it mean that it degrades so that if display is turned back on without upgrading the SPR-RAM (i.e. sending the sprite data to it again), then the display will be messed up--or does it mean that the SPR-RAM will permanently degrade (i.e. you'd have to get a new system)?

It's DRAM; if each row of bits in the DRAM isn't accessed (refreshed) every so many milliseconds, the contents will deteriorate.

When the screen is fully turned off, the PPU isn't refreshing the DRAM; if you plan to turn off the screen for long periods of time, be prepared to update OAM.

(No damage to hardware)

Andrew Davie on the nesdev@yahoogroups.com list stated that some prototypes of The Three Stooges were affected by this. Some revisions of the NES PPU would lose OAM data faster once the system warmed up, causing sprites to flicker. Spraying refrigerant on the PPU chip actually stabilized the sprites.