How do I reboot Samsung Galaxy S when it locks up? Is pulling battery bad?
Android is pretty resistant to faults resulting from sudden power loss, but there's always a risk of data corruption/loss, depending on open apps and files at the moment.

Have you tried holding the power button longer, for about 15 seconds (until the screen goes black and the normal startup screen appears)? On my Galaxy S this triggers a hard reboot, meaning that the phone forces itself to restart without regard to the usual shutdown process. I'd think it's a bit friendlier than pulling the battery, but nevertheless, it's a "wrong" way to reboot.