The spatial evolution of a velocity-modulated ion beam is described theoretically and experimentally for a stable, ion beam-plasma system. For a sinusoidal modulation, the perturbation initially grows and then shows a periodic change of amplitude along the beam. But under certain conditions, after the initial growth and subsequent saturation, the perturbation is observed to dampen away monotonically. The initial growth is also measured with ramp and pulse modulations. The experimental results agree quite well with the so-called 'wave theory' for ion beam bunching.