A lot of people don't, but I'd always advise it.
If you have your own secure rack, with only you accessing it may not be so important, but if you have a shared rack/open cage you should definitely get one.
As long as it's lockable.
Simple answer - essential: no, can you work without it: yes!
Only other thing to keep track of, the poweredge 1950 power button is NOT recessed, which means if you (or someone else) leans against your rack, the power button can be bumped and possibly turn your server off. I speak about this from experience.
1st generation? so its incredibly old and will draw a ton of power for very little performance... whats the point? get an Atom or newer Celeron or i3 machine instead.
Sometimes it's not as simple as just "buying a new server". People work off limited budgets, and sometimes this makes them use older hardware. I was like that when I started up my business. But you grow, and eventually can buy newer hardware.