I spend time every week coming up with preschool lesson plans, but I don't assess if it did it's job. Assessment in the preschool classroom is important not only at teacher conference time, but also when evaluating the effectiveness of lesson plans.
We probably all use portfolios, but that just isn't enough. It is nice to pull out the folder of work samples at a conference, but can it help you modify your lesson plans to be more useful? Yes. You can go through and say "Bobby has got the hang of patterns" or "Anna hasn't gotten the hang of cutting yet". With that you can modify your lesson plans to include more advanced math concepts with Bobby, and plan more opportunities for Anna to practice cutting paper.
All classrooms need to have a system to do observations in the classroom. The methods used don't really matter, but the knowledge it gives you when you are planning is invaluable.
If you don't use a camera in documenting, you should. Parents can see you aren't just "playing" and you have more insight to better serve your students.
We are taught to assess for parent teacher conferences, but some time assessing can really help you be a better teacher.