Healthy self esteem is of course very important. But an inflated sense of self is deadly. The key to an honest and accurate self-evaluation is in knowing the basis of our self worth - our identity in Christ. Knowing who I am in Christ is sufficient to maintain a healthy self esteem, without becoming proud or arrogant.
If I try to base my self worth on anything else though, I am most likely going to end up with a perverted sense of self - and either live in self condemnation or live in denial. Either way, it's a deadly game. So it would seem that being grounded in how Christ defined me on the cross is the most important thing I can do to maintain a healthy sense of self.
Now here is a big irony about self esteem: People who are genuinely focused on others instead of just themselves rarely suffer from low self esteem. So it seems the death of selfishness and self centeredness brings life to self esteem.