Yes, I feel that for the most part, damascus is created for cosmetic and artistic purposes. But you only have to see damascus blades being used in cutting competitions (I believe Kevin Cashen is one example) and subjected to Mastersmith ABS testing to know that damascus, when properly made and used is the REAL DEAL. The 'working ability" of damascus is dependent on a couple of factors -
1) The steels used - the steels need to be tool steels, ie.- individually need to be functional knife blade steels. The choice would affect how the steels differentially etch, thus producing the damascene pattern. The use of nickel in some damascus is generally purely for its extreme contrast and is a cosmetic choice - it doesn't harden and is a soft spot in the steel.
2) The skill of the maker - because damascus is composed of multiple layers of different steels welded to each other, damascus is only as strong as each weld. Also, excessive temperatures, unnecessarily prolonged forging etc. when trying to forge damascus can damage the cutting properties of the steels, so skill is crucial...
IMHO, most damascus produces a slightly toothy edge because of the different steels at the edge that wear differently on a microscopic level. This may or may not be a good thing, depending on your preferences. This characteristic also depends on how fine the damascene pattern is. A "straight" steel blade of say RWL34, BG42 may create a finer, consistent edge without the inherent toothiness of damascus, but I suspect that most users will not notice that.
I use a bit of 1075 and L6 damascus made by another maker and I find that this stuff really WORKS. The contrast is very nice, yet you get a blade that uses 2 time-tested steels that are well known for great toughness, edge holding and ease of sharpening.
Damasteel is composed of PMC27 (similar to 440A) and RWL34 (sim. to ATS34) in powder stainless steel form. I've only made and used 2 knives with Damasteel, but in my limited expereince, I find the edge holding superior to any 440C knife I've made or owned.
In regards to skill - most makers who have made a name for themselves creating damascus are doing some INCREDIBLE stuff with excellent quality control. I'd be selective about which beginner I get a damascus knife from, but even many of the new knifemakers are turning out top-notch damascus because the benchmark has been set so high by other makers.
This is MASSIVE TOPIC and I'm hoping to see more wise words from others who have more experience on this matter. Jason.