As far as I can tell, yes - it is ignored in that circumstance.
The "This plug-in will make contributions to the UI" toggle controls two things:
1) Which class the auto generated Activator class extends (see further explanation below).
2) The list of available templates to choose from on the "Next>" page of the wizard.
But if the first option isn't selected, neither of these are applicable. Almost seems like a bit of a form logic bug. The UI should ideally conditionally enable/disable the second toggle. Oh well...
If set to ON, Activator extends org.eclipse.ui.plugin.AbstractUIPlugin
if set to OFF, Activator extends org.eclipse.core.runtime.Plugin