It is widely acknowledged these days that chronic overtime is bad: it makes your team unproductive, unmotivated and unhappy.
At the same time, never having to do any extra hours could be an indicator of unimportance of ones work. Or you have too conservative schedule -- which is both bad economically and demotivating.
So, I think that it is even useful to have an occasional bursts during development cycle. Not only can it help to meet some tight deadline, prepare some demo, polish last glitches before release, or even -- yes -- simply make up that mistake made during time estimation. But also it can actually motivate and unify developing team. It is healthy to push yourself once in a while.
For me, "occasional burst" means to work harder than my long-term pace allows for about a week or two twice a year -- otherwise it's neither "occasional" nor "burst" anymore.