From the Daily Dot article, it looks like what you described is what happens (TouchID is disabled) and the phone will function mostly fine, but the author also encountered other bugs possibly related to the issue. However, the bigger problem was whenever he tried to restore or update the device, Error 53 occurred and it failed. Restore from backup still worked though. So essentially, his iPhone was locked to that iOS version and could not be modified.

http://www.dailydot.com/technology/what-is-error-53-iphone/