You certainly don't need to read music to play the guitar; in fact, you don't have to be able to read music in order to learn and understand a good bit of music theory. You'll need to learn about the realtionships among chords and among keys, and you *can* get to know this stuff quite well without ever learning to read music.

Learning to read tablature is probably more useful than learning to read regular sheet music. Both use the exact same system to indicate time (rhythm, duration of notes, etc.), but tablature shows which string to hold down at which fret whereas standard music notation just shows which note to play. On the guitar (or any stringed instrument) any given note can be played in more than one place, so tablature provides a clearer picture of how to play a piece than standard notation of the same piece.

I would emphasize the playing of scales much *less* than some of the other respondants here. You can play chords exclusively, no single notes at all, for quite a while as you start playing and continue progressing. I would think that the first single notes to try playing with (or, more precisely, *between*) chords would be simple bass runs, "walking" from one chord to the next.

You could spend years, literally, playing chords connected to each other with simple little bass-note runs before ever trying to add the melody notes (on the treble strings) that would correspond to what you'd be learning to play by practicing scales.

I think this is especially true if you get into fingerpicking. You start by picking patterns with your right hand while holding down chords with the left, gradually adding a little variation first with bass notes and only later -- much later -- by squeezing in bits of melody on the high strings.