It has well-understood powers to fire off pain circuits in perfectly normal brains.
Stephen Pinker gave a talk on the subject at Google a few years ago:
http://www.youtube.com/watch?v=hBpetDxIEMU
Swear words are swear words because they actually are processed differently in your brain than regular propositional speech is. They're the linguistic counterpart of the emotional signals used by other social animals. The difference is that the sounds associated with our signalling systems are learned as part of language, rather than being hard-coded and instinctual. Hence, there's the possibility for different people to have their brains trained in different ways. So, for some people, the "f-word" may not have any ill effect, but don't deceive yourself thinking that there aren't people who really are hurt by it.
Since the psychological reaction is associated with the signal, not with whatever additional propositional meaning it might have in the language, referring to it by circumlocution really does have a point- it lets you talk about the words without risking triggering someone's reaction to the words.