Heat definitly affects timing and consequently, Performance. Most modern ECU's take their cue from the IAT's and retard timing as those temps rise as a protective measure against detonation. They sample water temps to, but they stay pretty well regulated in general. My old Corvette would start to pull Timing at 86 degrees which shows you how low the performance hit starts.. On my turbo'd Audi TT I installed an intake manifold insulator (1/4" Phenolic spacer) which ultimately dropped the IATs 20%, You can see the graphic timing changes in this before/after plot..
Here's an example of an '08 Corvette Timing Map showing the retard as IAT's rise..
