Please read the following two threads:

Thread727-9504
Thread727-14446

These should give you a decent background about these.  If you have any questions after reading these, feel to ask and I'll try to answer them.

Brad

Thanks Brad for your answer.

I have another question relating to the same.

I am solving a shaft model with 5 pairs of contacts.The mesh(solid brick elements)is good. When I solve this model using Reduced Integration I observe that some energy is lost to control spurious energy modes. If the same model is solved using Full Integration then no energy is lost to control spurious energy mode. Below is the Energy output
of the model. kindly help me in understanding the same

APPROXIMATE ENERGY TOTALS -
  KINETIC ENERGY                            .000E+00
  RECOVERABLE STRAIN ENERGY                 25.2
  EXTERNAL WORK                             12.5
  PLASTIC DISSIPATION                       .000E+00
  CREEP DISSIPATION                         .000E+00
  VISCOUS DISSIPATION (IN DAMPERS ETC)      .000E+00
  STATIC DISSIPATION (STABILIZATION)        .000E+00
  ENERGY LOST AT IMPACTS                    .000E+00
  ENERGY TO CONTROL SPURIOUS MODES          .000E+00
  ENERGY LOST THROUGH QUIET BOUNDARIES      .000E+00
  ELECTROSTATIC ENERGY                      .000E+00
  ENERGY DUE TO ELECTRICAL CURRENT          .000E+00
  ENERGY LOST TO FRICTIONAL DISSIPATION     .118
  BUCKLING DISSIPATION (FOR FRAME ELEMT.)   .000E+00
  TOTAL STRAIN ENERGY (STRESS POWER)        25.2

When they say 'spurious energy modes', read 'hourglassing'.
FEA codes will introduce artificial energy to try and restrain hourglassing modes.  The amount of hourglassing in the model is reflected in this value.

A rule of thumb that I have heard is that this energy value should not exceed 1-5% of the value of the strain energy.

For fully-integrated elements, this value is zero since they don't undergo hourglassing (hence no energy is input to resist this deformation).

I hope this helps.  Let me know if you have any follow-up questions, or if this isn't clear.

Brad

Thanks Brad,

Even though I have a resonably finer mesh in my model
I feel there should not be any hourglass problem.
I think I should run my model using Incompatible modes and check the same.

Hourglassing is minimized with a finer mesh, but it will still occur.  What is the percentage of artificial energy wihch you are seeing in your mesh?  Also, what levels of strains are you seeing?
I would definitely recommend incompatible modes elements for this situation if you are seeing problems.
Brad