What damage can happen when a timing belt breaks?

This depends on the type of motor. Many motors today have interference heads. This means the valves open down into the path of travel of the piston; timed in such a way they don't strike each other. If your belt breaks on a motor like this the piston will travel up and hit the valve and could cause serious damage to the valve, the head and/or the camshaft. This could mean buying a head for your motor. There are pictures of Porsche motors that blew the valve right through the valve cover when the timing belt broke. Preventitive maintenance is the best cure. Follow the manufacturer's maintenance schedule and replace the belt as they recommend.