Yes, you do.
The OS swap file is for managing memory from an OS level.
The VMtools simply use the ballon driver for managing the amount of physical memory allocated to a VM.
so, if your VM has 2 GB of ram allocated and is using 1.8 - at an OS level, Windows will want to free up memory - to allow more RAM to be availabvlke for further transactions. If the ESX host is not constrained at this point - there is no need for it to use the balloon driver.
In the same way, if your ESX host is constrained and the VM is only using 1GB of RAM, but the host needs to meet reservation requiremtns of other VMs, it may choose to 'manage' the OS physical memory allocated.
the way in which Swap and the VMtools work is totally different and for different reasons, so I would continue to use MS swapfiles.