The keepalive setting forces Apache to terminate the tcp connection if no browser activity has occured for 15 seconds. Otherwise it doesn't do anything.
I'd guess there would be more bandwidth used if turning this setting off because if the connection is terminated by Apache, the browser won't know it (because, afterall, the browser was inactive for 15 seconds). When the browser tries to access the server, the server will reject the request and cause the browser to reestablish the connection. Those few tcp packets sent back and forth would eat more bandwidth.
If you're worried about bandwidth, then you'll probably want to leave this setting on. If you're worried about number of people who can at least partially access your server, then turn this off.
Bandwidth saturation can be a tricky issue to resolve when it's web related. It might depend on your clients -- are they using modems, or T1s themselves? Are they retrieving mostly static web pages, or huge bitmaps? Are all those hits legit (could be someone attacking your server, in which case you definately don't want the keepalive off). Maybe it's time to upgrade your net connection? Thousands of hits over a day is no problem for a T1.Thousands of hits over, say, a second, might not run to hot.
You might consider tuning Apache so that it only allows a certain number of connections. I think the default setting is 256 (hardcoded, can be changed but requires a recompilation). If that number is exceeded, you'll receive a too many users error (503 I think). If you're concerned with user experience, you might consider tuning Apache down a bit so that it allows fewer sessions, and then leave keepalive off. This will help deter bandwidth saturation, and leaving keepalive off will help deter dos hacks on your server.
Just my .02