If you fly well clear (horizontally) of all CAS it will make little or no difference to ATC if you carry Mode 'S' or not.
If you fly near to CAS, e.g. north of LHR below CAS again it will not really effect ATC. However, it will make a difference to aircraft carrying TCAS( collision avoidance system), they will be able to find out what your level is and this will stop many nuisance TA's (traffic advisory) that these aircraft receive.
Each Mode 'S' transponder has its own unique code which groud radar can interrogate to give ATC very accurate information.
When a TCAS equipped aircraft (they already have Mode 'S' transponders) interrogate another aircraft I think mode 'S' is used , but I am not sure.
In the future Enhanced Mode 'S' will be used to give ATC much information automatically that we have to ask for today, e.g. selected level, IAS, G/S selected heading all from FMS.
So in the future if you operate in or near to (even under) CAS mode 'S' transponders will become very, very important to Mode 'S' radar equipped ATC units.