Yeah, I'm all for the idea of riding without a helmet when I'm commuting in downtown Chicago... but I already have two nasty gashes in my favorite helment that make it clear this would be a very bad idea.
Yup, replace it. A helmet is a shock absorber, the styrofoam is compressed during the collision. Once it's compressed, it can no longer absorb shocks. A helmet needs to be replaced after a crash. The damage is not even necessarily visible on the outside.