Hey bilko, Brian answered your questions dude. No it is not good that the baffle came out & yes you will need to repair/replace it. If you are handy with a welder or know someone who can weld try welding it first, otherwise get yourself a new exhaust.
Prices can be from $65 delivered for a shit Ebay one (see Mental DHZ's post earlier today) up to a couple of grand for US performance one like FMF or BBR. Your exhaust will affect the performance of ya bike a fair bit. Good luck eh?