How does Intel Turbo Boost Technology improve performance on the new Core i5, i7 series of chips?

"Turbo Boost can increase the clock
speed of each core individually to get
more performance out of the chip.

Basically, if the current application
workload isn't keeping all four cores
fully busy and pushing right up
against the chip's TDP (Thermal Design
Power) limit, Turbo Boost can increase
the clock speed of each core
individually to get more performance
out of the chip.

Example: For the Core i7-920XM, that
maximum speed bin is 3.2GHz, not the
2GHz value which is marked on the
part. In principle, the 920XM could
run all of its cores at 3.2GHz all the
time if enough power was available and
if the heat sink could keep the chip
cool. (This is why Turbo Boost isn't
like consumer overclocking: the chip
is operating within its design
specifications at all times.)

Read the full article:

Explaining Intel's Turbo Boost technology

Are we likely to need better power supplies and even bigger heat sinks and fans with these new chips?

I suppose, if you improve cooling you can push the limits further with Turbo Boost, as it is linked to the thermal design specifications."