I always OC my graphics card.
I use profiles so it's underclocked when not in heavy use and when I play something that needs heavy duty I switch to the OC profile.
Haven't had a single card die on me. Current one, x1600pro has been on duty since 2006 or 2007 I think. Still enough to play even Mass Effect 2 with decent graphics due to OC so it definitely does make a difference.
As for the life span. If the heats stay down and you don't mess with voltage the life span won't change. Of course if you add RPM to the fan it will wear faster.
But that driver error sounds like a reason not to overclock instead...
I'd check your GPU, CPU, Memory and MB for possible problems. Heat, dust, loose fan, loose wire, etc.
If it persists try with another card, if still nothing then it's probably in windows or MB.
But hey, PCs are mysterious machines so do try,