It will give your fuel system (and temp guage) the wrong temp reading and that'll cause your fuel systems computer to think the engine's either colder or warmer than it really is. Because of that, you fuel mixture (injector duration) and possibly idle speed may be effected. The times I've seen them really bad it seems to read that the engine is cold at normal operating temp so your idle would then be high and the engine will be running rich, possibly poorly.

It won't cause your engine to overheat but an overly rich mixture is never good.