Bloody hell, Tony, don't hold back, man.
I've seen it done badly, and I've seen it done well. I suppose the main thing is to make sure they're integral to the story, and not just an add-on that could easily be red penned, as Tony says. Or worse - fuck up the plot and create confusion.
I had dream sequences in Carousel that related to the physical changes Luke and Emma were going through. I also had Emma dreaming about her subject of study at one point (when she was sitting beside Elliot's swimming pool), to illustrate her passion for history, and to leave her a little disoriented and susceptible when Elliot arrived. I multi-tasked, in other words. But I still tried to keep everything short. Just a paragraph or two. There's always a danger in running off with it, and ultimately I think you have to keep the main elements of the story in real time.
Incidentally, I do the same thing with thrashing-around-in-bed scenes. There should always be something else going on - plot development, character enhancement - otherwise what's the point?