Mods don't hurt the community by themselves. However, when combined with certain selfish players and a gear-centric game, they cause segregation.
When a game is as gear-centric as WoW or many other MMOs, it becomes a "if you fall behind, you're left behind" situation. To avoid being "left behind" many raiders feel they need to obtain the best gear as quickly as possible. Mods such as GS allow them to screen potential group members. While a player's gearscore does not equal that player's skill, refusing to play with people with low GSs is much faster than actually playing with them to see if they are any good. This ensures the raiders (not all raiders, just the ones who refuse people based on GS and other mods) with good GSs progress quickly enough to see all of the content, but it isolates those with lower GSs.
This is not necessarily the mod's fault as much as the community’s, but the mods do enable this segregation. It would probably happen without mods like GS, but not to the same extent. This, however, does not necessarily mean that mods should be removed, since they are also used to strategize and evaluate performance.
I believe that improving the community will help prevent the misuse of mods and will have much less collateral damage than removing the mods altogether (not that we have the power to do that).
Mods alone are not the problem. A bad community and gear-centric game combined with mods creates segregation. Improving the community helps prevent the misuse of mods.