A wastegate allows exhaust flow to bypass the turbo to stop it from building boost. If undersized, it will still allow the turbo to build pressure. I don't know if there is a downside to oversized.
A blow-off valve releases excess boost from the intake manifold. If your over-revved or your wastegate was too small and your turbo keeps spooling, this will keep you from blowing things to bits. Plus, it makes a cool noise!
IIRC, a blow off valve is recommended when you have a manual transmission as engaging the clutch can spool a turbo quickly and cause a boost problem. A wastegate is always necessary.
I'm putting both on my automatic, its just safer that way.
