I usually play with raging barbs on.
1) It spawns more barb units. In my experience, the number of camps doesn't increase. However, camps, particularly for the AI are harder to kill (more barbs running around), so you tend to see more at one time for a while. After everyone expands, the number of camps declines rapidly.
2) It hinders the AI by limiting its expansion ability. The more barbs, the harder it is for the AI to expand. This will vary greatly depending on the AI and who they get (aggressive AIs tend to kill the barbs and still expand), but you can see AI civs literally pinned by barb waves hitting thier cities.
3) If you don't keep the number of barbs under control, you can be in for a rude shock when you move into an area - especially an isolated one that's had a camp for a long time. After archers start appearing, it gets even worse. You can have six or 8 barbs and if half of them are Archers, one or two units can quickly get mauled.