One of my friends' websites (which I help maintain) has about five hundred 404 errors in Google Webmasters, and 120 unreachables. These have mostly been caused by faulty plugins (all unreachables are from a translator plugin) or human errors. Most of the 404 that are linked to were detected as long ago as last year, and they won't go away. My friend has an OCD about his ranking (he's currently middle of firstpage, trying to get to #1 position) and he thinks these errors are somehow hurting him. I keep telling him that Google doesn't care about these 404s because they didn't have any ranking to start with, and google treats 404s as "gone". So, do they affect your ranking?