Firstly DUMP is deprecated and will be removed in a future version of SQL. Replacement is backup. Truncate_only (as an option for Backup Log) is also deprecated and does not work in SQL 2008.

It breaks the log chain. Once you run that you will not be able to take log backups until a full or diff backup is taken. That leaves you open to data loss. If the DB is in full recovery then, I would assume, that point-in-time recovery is required. Breaking the log chain means you lose the ability to do point in time restores.

If you don't need to be able to restore the DB to a point in time, just set it to simple recovery model and SQL will auto truncate the log on a regular basis.