Part One: Individualism As A Human Need
Humans are paradoxically both decidedly individualistic and intensely social beings. In some circles, these two aspects of life spawn the famous collectivist/individualist debate, but they need not. There is nothing about mankind's individualistic nature that negates our social nature, nor vice-versa. Those who like to pretend otherwise are probably over-simplifying.
Science and literature are both replete with great works dissecting and analyzing the inherent problems with being anti-social. It's clear enough to most of us that being an anti-social person makes one feel alienated (by definition) and generally dissatisfied. There has been some evidence in support of the fact that old people who lack a strong connection to other people - such as a close circle of friends or family - more quickly deteriorate both mentally and physically. Loners and outcasts can range from depressed to violent. The kinship of our fellow human beings is incredibly important to our happiness and mental health.
On the other hand, anti-individualism is a much less-explored topic both scientifically and in art and literature. Oh sure, there are some great works in political theory from the 18th and 19th centuries. There was that whole Ayn Rand thing, of course. There was Carl Rogers and his ideas about self-actualization; there were the Existentialists and their ideas about Authenticity. But beyond that, I am aware of no serious research that aims to study what happens to a person (or group of people) who is (are) denied their core sense of individuality.
One reason for this is, I believe, the fact that it is difficult to conceive of an absence of individuality. Even the most collectivist people among us put collectivism in an individualist's terms: Everyone has a role to play; Do your part; Do your duty; and so forth. This fact has lead many a philosopher into the many hilarious verbal paradoxes surrounding sentences like, "I am a collectivist [or socialist, or communist, or whatever]." One cannot even declare one's affinity toward collectivism without first declaring one's individuality.
The less-attentive among us stop there, and simply content themselves with the belief that collectivism is a philosophical contradiction. But there is a larger issue involved here.
It has long been understood that collectivism owns the language of Ethics. That is to say, within the philosophy of "right" and "wrong," it is almost always the case that the discussion involves to how best to treat other people, and why that is the case. Even individualistic ethical arguments tend to be descriptions of the many ways by which other people make out best when individuality is most rigorously maintained. Consequentialist ethical arguments appeal to the many positive consequences of our ethical schemes; whether those schemes are based on individualism or collectivism, the consequences are always described in terms of all people in general. Deontological ethical arguments have always traditionally been collectivist in nature. Utilitarian ethics are really just a special subset of the Consequentialist ones. Only Eudaimonism provides any kind of expressly individual ethical appeal, but it does so vaguely and has long since fallen out of favor.
The fact that collectivism owns the language of ethics is a real sore spot for individualists. How can one promote individualism when it appears so at odds with society's core moral concepts? Why be an individualist if individualists aren't ethical?
Yet, here we see that existence is inherently individualist. As I noted above, the language of existence - who and what you are, how you see yourself, whether you are alive or dead, and in whatever large or small way you happen to be defined - is entirely individualist.
Fighting against the concept of "collectivism" may well be a lost cause, precisely because our sense of ethics drives us to analyze how we should treat other people. On that level, "the collectivists" have won by a mile. But a fight against the concept of "individuality" is a fight against existence. Thus, we can easily see why the Axiom of Existence was so important to Ayn Rand. This, too, is what I mean whenever I claim that certain ideas are nihilistic or that certain actions are "acts of self-abnegation."
Those of us who become anti-social soon discover the horrors of denying the collective: loneliness, ostracism, stress, exclusion, and so forth. This is well-documented in scientific research. Equally as obvious, though not as well-researched, is the fact that becoming anti-individual leads to its own set of horrors in the form of existential threats: meaninglessness, aimlessness, laziness, lack of ambition, irresponsibility, et cetera.