Assuming no governor, as the plane flies, the battery voltage actually drops. So if you did nothing, so would the average rpms of the prop. Now some of the timer/throttle controls (JMP-2 and Ztron) allow you to program in a linear throttle rise to compensate the battery voltage drop.
However when you point the nose up, the airspeed begins to drop, and the prop load goes up. Now the rpm will begin to drop--but the motor begins to work harder (more current will flow). With this setup you are basically stuck with the lower rpm--sort of like flying in the low pitch high rpm mode.
The governor mode simply locks the rpm fixed, based upon the throttle setting (each ESC works a little differently, but in governor mode, the ESC interprets the pulse width out of the timer/throttle as an rpm, not as a throttle setting). If you run in governor mode, you don't need the voltage compensation I mention in the first paragraph. However you do need a setup which is running at something less than max power--otherwise you won't get that extra "juice" when you need it. The number we knock around is something on the order of 70-75% of full power. Then that 25% acts as a reserve to cme back in when the load goes up.
So the net result is that you will lose a little less airspeed in the vertical (but will still lose some). Most people are using ESC's with a governor mode on them. Typically those ESC's will cost more than ESC's without the feature.