@ Mad Nightmare: No you don't need it, but then you only have the "Software-Mode" you can use!
If you want to use the "Hardware-Mode" then you have three options:
1. Buy a supported GeForce-graphics-card! (From G80 upwards!)
2. Buy a AGEIA/nVidia PhysX-card! (A graphics-card seems more useful!)
3. If you prefer AMD/ATI, then you have to wait for a "driver"-wrapper or something like that! (If it will ever be made, rumours have been in the net that someone made such a thing, but no proofs were shown by him as far as I know!)
I hope that helped!
Hoozer