A peltier actually simply increases the total amount of heat that has to be gotten rid of (in order to make one side cold, energy has to be input, which makes the hot side hotter than just the amount of heat coming from the core). However you have a much higher area of contact for a heatsink (or more often a water cooler was used), and the cold side is considerably colder than a heatsink can be, so effectively you can get better cooling. You could use a very large heatsink and quiet fan to get rid of the heat.
However it requires excessive modifications, since you usually have to partition the peltier off from everything else to prevent condensation from dripping water on things. Current aircooling works quite well, apparently better than even peltier and water cooling used to work with older processors, despite increased amounts of heat and smaller contact areas on the cores. Peltiers just aren't really needed even for heavy overclockers. It would be interesting however to see results anyone might have on current use of a peltier and how it relates to ability to overclock. I would guess that with the now multiplier locked lines from all manufacturers, the bus speed limitations will prevent a peltier from significantly increasing overclocking ability, whereas with older lines, you could use the power of a peltier to allow the clock speed to go very high independently of the bus speed.