This answer is culled from http://arduino.cc/en/reference/servo. Summary: If you are using hobby servos, you don't need the motor shield, but if you want to drive more than one servo you need external power.
The servo library allows an Arduino board to control RC (hobby) servo motors. The Servo library supports up to 12 motors on most Arduino boards and 48 on the Arduino Mega. On boards other than the Mega, use of the library disables analogWrite() (PWM) functionality on pins 9 and 10, whether or not there is a Servo on those pins.
Servo motors have three wires: power, ground, and signal. The power wire is typically red, and should be connected to the 5V pin on the Arduino board. The ground wire is typically black or brown and should be connected to a ground pin on the Arduino board. The signal pin is typically yellow, orange or white and should be connected to a digital pin on the Arduino board. Note that servos draw considerable power, so if you need to drive more than one or two, you'll probably need to power them from a separate supply (i.e. not the +5V pin on your Arduino). Be sure to connect the grounds of the Arduino and external power supply together.
