Unfortunately we live in a society where grades DO matter. For residencies you will be competing against others who have achieved similiar board scores, but also achieved 4.0 qpa's or very close to that and are at the top of their respective classes. Residenices are very competitive. There were many students in the class above me that had very good board score along with being very close to the top of their class and they still failed to obtain the residencies they sought.
On the other hand I have spoken to perio and prostho faculty who say grades are not the only determination in selecting a candidate. Research, community service, publishing, board scores etc. can be other factors as to determining your selection. But, then this is perio and prostho. I believe for OMFS, Ortho, and Endo you better have those grades up!
Paws