As I understand it and please I am not a doctor....
Once your balance nerve is cut or damaged it does cause long term deficits.
The main deficit is the vestibulo occular reflex.
There is a test that you can do at home..
Its called the head impulse test.. or Halmagyi manouever..
Once your balance nerve is cut you will always fail this test, and no amount of vestibular exercises or time will bring it back.
The reason they cut the balance nerve is because normally surgery damages the blood supply to the balance nerve which can leave people with some pretty horrible balance problems, as a result they cut the nerve, to reduce balance issues.
You will however lose your vestibular occular reflex when your head is either rotated to the left or the right.
This is one reason why people can find driving more difficult after AN surgery.
Your balance nerve is like a gyroscope for your eyes, and you do lose that gyroscope effect, once the balance nerve is gone.
Without the reflex it takes time to manually adjust the eyes and get them pointing back in the right direction.
You learn to live without this reflex, but it will always take you much longer to adjust your eyes to where you want them to go after the balance nerve has been compromised.
Anyway check out the head impulse test, get a friend, and do it at home..http://www.youtube.com/watch?v=CZXDNLLGG8k
Plus more infohttp://en.wikipedia.org/wiki/Vestibulo-ocular_reflexhttp://headimpulse.com/knowledge-center/videos