The Dungeon Heart is, as the name implies, the life force of your evil dwelling. Once a keeper's Heart is destroyed, the land is lost. Other than that, it doesn't serve much of a function.

Certain spells revolve around the Heart. The Hold Audience spell will summon all your minions to the Heart, which is helpful if you find it under attack with no monsters within easy reach. The Armageddon spell will not only summon your monsters, but all the creatures (with the exception of chickens) on the map to your Heart. Obviously, you should be pretty certain you'll win the battle if you choose to cast Armageddon.

If you're looking for a quick way to take out an enemy keeper, and you have some surplus gold, locate his Dungeon Heart with the Sight of Evil spell (look near other portals on the map). Cast Call to Arms on his Heart, and hold down the left mouse button while casting to extend the range of the call. Your monsters will make a beeline to the Heart - and if they make it there, they'll take it out.