Looks like pretty much every Z that has ever gone over a curb or into a deep pothole at some point in its 30+ year history. Mine was quite a bit worse than that. The main thing is that the alignment is even side to side. If that is the case, then I'd drive it. If you're going to be road racing with big sticky tires or you can't get it aligned, then I'd worry about it. The Zedd Findings frame rails replace the injured part of the frame rail, but you have to locate and weld the TC bucket back on, so it's not a job for a first time welder: http://www.datsunzparts.com/NewParts/summary.htm
You could also repair with sheet metal as suggested above. I'd probably go with something a little thicker than stock, maybe .060" or something like that and cover up a good amount of the frame on either side of the dent after you cut that section out.