Sarah, I applaud you for caring for your fish the way you seem to be. Sorry for your coral loss.
From my observations diving in the Caribbean and Pacific I'm convinced Damsels play a crucial role in protecting corals from coral eating fish. They will agressively attack any fish that comes to close to their territory. I suspect this keeps coral eating fish moving instead of over eating a particular spot on the reef.
They are great little fish, just not really appropriate for a peaceful reef tank.