As I said before the Tournament, there is little doubt that Purdue is the best team in the conference, but IU may be the hottest team in the conference, and, to everyone's surprises, ended up within a game of Purdue in the Big Ten standings (although Purdue's non-conference record was much better). A win over the top-ranked Boilermakers tonight won't ruin their season--Purdue is essentially assured of an NCAA berth--although a loss or two in the Big Ten Tournament might affect Purdue's aspirations toward hosting an NCAA regional. And, again, don't forget that this is a double elimination tournament. The loser of this game will need to win one game in the losers' bracket to make it to the championship, so there is a more-than-fair chance that IU and Purdue will meet again, whoever wins (and, if they do meet in the championship, and the team from the losers' bracket wins on Saturday, there will be a deciding game on Sunday).
These teams did not meet in the regular season, so in addition to its championship implications, it's a significant event for the rivalry as well.