DO USE CFLs FOR:

CFLs are designed for many applications including:  outdoors; bug lights; ceiling lights; 3 way; dimming; etc.  CFLs should be used for:

1.  In common household lamps and open fixtures to save money.  This includes lights in dining room, kitchen, bedroom, hallways, stairwells, bathrooms (there are CFL vanity globes), workshops, recreation rooms, etc.

2.  To save cooling costs - CFLs don't generate heat that adds to cooling costs;

3.  In hard to reach locations (high ceilings under 12’, above furniture, etc.).  CFLs long life saves labor and can help reduce injuries if ladders are needed.

4.  In fixtures near window treatments – cooler temperatures = lower fire risk.

5.  For easier reading – CFL light provides better contrast and less eye strain. (see Kelvin)

6.   To increase light level – You can increase light levels and still save energy.  (Switching from a 75 watt incandescent to a 20 or 23 watt CFL saves over 50 watts of energy.  Using a 23 watt CFL does this and increases the lumens equivalent to a 90 watt incandescent.)

CFLs ARE NOT RECOMMENDED FOR: 

Closets
Electronic Timers or Photocells
Dimmers – unless designed for dimmers
Recessed or enclosed fixtures – unless designed for recessed or enclosed fixtures
Sub-Freezing temperatures – with demanding usage
Spot-light usage – for long distance or directed beams of light

A new compact being developed called CCFL (Cold Cathode Fluorescent Lamp), is expected to address some of these issues, like cold temperatures, enclosed fixtures, vibrations and possibly others. 

Closets.  CFLs are designed for usage for a half hour or more.  The longer they’re left on the longer their life.   Their life is reduced (they don’t last as long) when they’re turned on and off frequently.  Therefore, for closets and other places where lights are only needed for minutes at a time, it is recommended incandescent bulbs be used.  In those cases, the energy savings may not outweigh the cost of the shortened life.

Timers.  Photo cells timers bleed electricity that shortens the life of a CFL.  Mechanical timers allow trickle voltage to cycle through the lamp when it is off. This causes the lamp to try to start itself when there is not the proper voltage present.  This also shortens the lamp life.  CFLs are labeled as unsuitable for these uses because of the shorter lamp life 

Dimmers.   Generally, no.  However, there are CFLs designed specifically for dimmers.  Generally speaking though, CFL light bulbs cannot be dimmed as they can only operate at one level.   Those designed for dimmers are actually 3 or 4 CFLs combined into one unit.  The dimming is achieved as units adjust to turn on or off to the desired level.  This is similar to a 3 way light bulb.

Recessed or enclosed fixtures.  It is not recommended that you use CFLs in an enclosed indoor ceiling fixture unless they are designed for that purpose.  Because these fixtures don't have any airflow, the temperature of the light bulb gets very warm, and the life of the average CFL is shortened.   However, there are CFLs specifically made for recessed ceilings fixtures and track lighting referred to as flood lamps that should last the full five years.  As far as enclosed fixtures, again, the temperatures could result in a short bulb life.  If the location is difficult to reach, it may be worth the shorter life.  Suppose the CFL is put in an enclosed fixture in a hard to reach location and it lasts only half the rated life of 10,000 hours, or 5,000 hours.  At a conservative estimate of 2,000 hours of usage a year, the CFL would last 2.5 years.  Using incandescent light bulbs for the same 5,000 hours, you’d have to change the bulbs at least 5 to 8 times.  By using a CFL, even with a reduced life, that’s 5-8 times someone didn’t have to get on a nearby chair or pull out a ladder to change out blown light bulbs.  Thus, there’s that much less a chance of an injury.  This caution does not generally apply to outdoor fixtures.  The cooler outdoor conditions at night reduce the heat impact.   

Freezing Temperatures.  Many currently available CFL products are rated to start at 0 degrees F but may not be suited for high wind chill areas.   Temperature affects how efficiently a CFL will light. At low temperatures, it is more difficult for the ballast that is driving the lamp to create and maintain the gas arc necessary to produce illumination.  Michigan can have temperature dips below 0 for a day or weeks. It is important to consider whether the potential for a few days without CFL lights is acceptable in your situation.  Note also that at freezing temperatures, CFLs may provide 50% less light. If the specific amount of light output is critical to your installation during cold temperatures, it may be necessary to install higher wattage CFLs or additional lamps to cover cold periods.  

Another alternative is to use enclosed fixtures.   An enclosed fixture will help maintain higher "lamp wall temperature" and therefore higher levels of light output in colder weather. The enclosure provides an air space that serves as an insulator to the outside temperature, which helps maintain proper operating temperature. The enclosure also helps the lamp maintain warmer temperatures by greatly reducing any wind chill effect.  

Spotlights.  Fluorescent lights provide a more diffused, soft light.   They do not have the ability to provide a concentrated narrow beam of light as there is no single point source where the light is produced.  Therefore CFLs are not appropriate for accent beam lighting or glittery displays, where a tight beam of light or sparkle is needed.   [This same limitation should also mean that fluorescents are good for reducing light pollution in exterior applications.] 

Source:   Most of the above information is from the US Department of Energy’s ‘Tips for Using Compact Fluorescent Lamps’