Pros for the Art Market: In a way, this auction was a giant publicity stunt for Sotheby's and taking it on was a huge risk which made it even more exciting for the public to watch. The rewards were thus exponentially great when the auction was a success, bringing in hundreds of millions of dollars. For Sotheby's, this meant giant profits from the buyer's premiums of the night. The health of the auction houses is beneficial for the art market because they keep a great deal of the secondary market afloat. Also, Sotheby's and Christie's provide the singular service of acting as the measure for an artist's work in the market. With the publicity of their sales, and the transparency of their pricing and selling practices, they are good indicators for the value of a work as compared to other similar works sold. This method is how many price the works they own from purchase on the primary market but have not attempted to sell on the secondary market. 
Cons for the Art Market: In selling these works on the primary market through auction houses, Damien Hirst was trying to establish a precedent that he has been hoping would become the new norm in the art market, namely that a piece of artwork would sell for the its highest price in its first sale. Undoubtably, Hirst holds this opinion because as an artist he sees a cut of the first sale and then no other profits on the secondary market. It seems unfair that art should appreciate in later transactions and the artists creating the work should not benefit from this. Yet this is an unhealthy precedent to set for a market revolving around growth and the projection of increased market profits. If art will only depreciate with each sale, who would ever buy it or sell it again? It might potentially be beneficial for arts in the sense that it would mean people buying work were interested in its more intangible aspects. Unfortunately, it is a very bad thing for this to be the way of things for the art market as an economic entity. And the reality of this is setting in. In the months following his auction, nearly 2/3rds of his works went back up at auction and sold for less than they had originally been purchased for.
Further, in selling his work in the auction houses as a primary market, Damien Hirst sets up the possibility for other artists to follow in his footsteps and disrupt the artist/gallery relationship. By bypassing his galleries, Hirst has made more significant profits for himself, but the art gallery is not to be dismissed as unimportant to his career. The galleries and the placement of his works into museums and important collections has no doubt played an important role in his fame and fortune. If other artists of wealth and status follow suit, then they could potentially discredit their galleries and destroy a vital element in the life of the emerging artist. We can only hope that this process will go in the other direction and that some famous artists' departures will cause a fresh influx of new art into galleries, breathing new life into them and attracting a new clientele of investors. 
Pros for Damien: Pros for Damien clearly stand in the realm of sheer profits he has made by the sales. With record direct income, and not having to split the sales prices with a dealer, Mr. Hirst has been able to raise a significant amount of money in a short time. Also, if the rumors are true, he has been able to rid himself of excess inventory so that he can start his artistic endeavors anew. Finally, the media coverage of this milestone auction has increased Damien's branding and fame as a heavy weight artist on the scene.
Cons for Damien: Cons for Damien seem to be more on the side of his declining current prices and a flooding of the art market. While Damien's auction was well timed and right before the big bubble burst in September, the declining prices of his work in the following months has severely damaged his image on the art market. Many of his paintings, specifically his butterfly paintings, went right back on the market following the bubble burst for lower prices than they had fetched originally. This brings uncertainty as to the worth of Hirst's oeuvre. His future work could be worth less because of this sharp fall in his current prices and the confidence he has lost from his collectors. Also problematic is the fact that Hirst essentially flooded the market with his goods to a slew of new dealers and collectors (whoever was willing to pay, and not people of good repute for holding onto works or lending them prestige). These newcomers then put many of his works back on the market immediately. The huge amount of Hirst work currently available on the secondary market is unprecedented and definitely contributing to his falling prices. I think it was a mistake of his to flood the market and overproduce in such a public way. His gallery is said to have hundreds of his works in back stock, which are rumored to be works they couldn't sell, but I think that this could have been a strategic maneuver to limit works available and increase exclusivity to drive up prices. Damien has thus undone all of that work in one fell swoop... and he's lucky he saw some big profits now because he might not in the near future. 
http://www.modernedition.com/art-articles/general-art-articles/damien-hirst-auction.html
http://www.time.com/time/magazine/article/0,9171,1838750-3,00.html
http://www.artquest.org.uk/articles/view/beautiful-inside-my-head-forever1
http://artmarketmonitor.com/2010/02/06/beautiful-inside-my-head-whatever/
http://www.time.com/time/video/player/0,32068,1774353335_1839008,00.html