Doesn't crash, but sometimes apps seem to be created under the assumption their permission request isn't creating a popup, so there are sometimes like 10 in a row, so the user will often give up and just either blanket deny or accept
EDIT:an "allow for 10 min" option would resolve this
The lack of a "for 10 minutes"-type option is, IMO, the biggest failing of Privacy Guard. XPrivacy is better in that regard, but was harder to use overall when I last tried it.
XPrivacy does have the benefit of making it easy to provide realistic-looking fake data, which I believe the CyanogenMod team is against.
In my experience, the apps I've used don't crash. The biggest problem I've seen is me getting frustrated with an app for not working as advertised. Then I remember that I've enabled privacy guard and the app must not be getting some info it needs from the OS.
Code that assumes it is going to get data instead of allowing for an empty response (in a circumstance where this is technically possible in reality but so rare the developer didn't thing to allow/test for it) could cause misfunction.
While I'm not exactly certain on how Privacy Guard works (I have yet to examine that code base), if a phone returns [] for a list of contacts and the application crashes...
If you have a rooted device, try XPrivacy. That gives you a lot more options and you can even set what data you want the app to see. Want those apps that are asking for your location to think that you are on the North Pole? No problem.
EDIT:an "allow for 10 min" option would resolve this