He was funny to me. The interplay between him and Jerry was worth watching, and I've always appreciated the actor from 3rd Rock from the Sun. He worked well with Kramer as well, just seemed to fit into the show pretty solidly for my tastes, and I'm a big Seinfeld fan.
I had to fight nausea every time he had a part. Everything about that character was repulsing; from his sinister plots, to his annoying voice, to his fake and abhorrent laugh. The show would have been better without him. Personally, I changed the channel whenever he came on. Final answer--NO, he was a detraction from the quality of the show.
Wayne Knight is an incredibly gifted and versatile actor, check out his performance in Torchwood: Miracle Day if you get the chance. But his character Newman was an unfunny role on an unfunny show. There was nothing that felt real about Jerry's dislike of the character, and I disliked how he was turned into a fat loser stereotype.
This is the one area that Seinfeld was behind in, they had to have an archetypical annoying neighbor. If a character is created to be annoying, then how do they expect the audience to like him? This show was based on the banter between the main four, and Newman interrupted that consistently.