In theory at least the frequency provides a hint to Google how often a
particular page is expected to change. Whether it makes any use of that
or not I couldn't tell you. Maybe not because it is so often misleading
- especially if you see a lastmod date way in the past with a frequency
of daily, that's not quite helpful.
An accurate lastmod can certainly help Googlebot "decide" what is worth
re-crawling. No point recrwling something that's not been modified since
the last time it was crawled. But always setting the lastmod to today
when it's not been actually modified doesn't help either because after a
couple of rounds of crawling Googlebot figures it out as being
unreliable and ignores it altogether.
If unable to provide accurate lastmod and frequency values you might
as well leave them out. If they are left out for all urls the benefit of
using an xml sitemap as opposed to a plain text list of urls disappear.
Christina