Absolutely - of course it can. If I go to a website and it is full of grammar and spelling mistakes I am not confident in that company's ability to do other things. It also concerns me what level of after sales support there will be if I get a problem. From the SEO point of view it has a small affect - Google can spell and grammar check - so "all other factors being equal" a well written site will rank higher than one where the language is not in proper use.
Of course I've seen a lot of SEO Indian so called "experts" sites full of bad english i wouldn't order from such site even if i have a gun pointed at my head ...
Not only can it affect your reputation it could also possibly affect your rankings. After the recent Panda update Google issued the following statement regarding some of the criteria they are now looking at: 'Does this article have spelling, stylistic, or factual errors?' www.googlewebmastercentral.blogspot.com/2011/05/more-guidance-on-building-high-quality.html