You do need to configure P1.6 as VBUS in order for USB to work.
Inside the USB IP, once this pin is configured as VBUS, it controls the pull-up on D+ line internally once DCON bit (bit 16) in DEVCMDSTAT register is set to 1. In IOCON, by default, all the pins are pulled up internally including p1.6, so, even if you disconnect the USB cable, you may not see the connect change in the status register. You need to set
to the mode bits to inactive once you configure this p1.6 as VBUS in IOCON.
In short, even if you want USB enabled all the time, you need to configure P1.6 as VBUS and can't use this pin for some other purposes.