Yes, they do wear out. I have had a couple that have gone dull. The cheaper ones are made from a softer steel that doesn't hole an edge as well as harder steel will.

This is the cheaper one that I have dulled out.
http://www3.towerhobbies.com/cgi-bin...LXK248&P=7

These are made from a harder steel and doesn't wear out as quickly.
Standard
http://www3.towerhobbies.com/cgi-bin...LXEGH7&P=7

Metric
http://www3.towerhobbies.com/cgi-bin...LXEGH6&P=7

One thing to remember when using a reamer. Never ever turn it backwards. While reaming it out you turn in one direction to cut with. But when it's time to remove the reamer keep turning it in the same direction as you pull it back out.

Hope this helps

Ken