FragPipe has posted an excellent (really) article over the debate of Friendly Fire.
Click!! As a side note, recently I played in a clan match with FF on and it was actually pretty fun, too bad it's a bad option for public servers.Counter-Strike has introduced a rule that the majority of servers with ff on, have activated. This rule basically enforces that if you kill a team-member, you die at the start of the next round.
Now this does solve a few problems, especially with the lamers that team-kill you as soon as the round starts. At least you don't have to worry about them for a round. But this rule can also be a pain the ass.
Firstly, a team-member can reduce your health down to 1%, and not be penalized at all. This creates a lot of frustration, and more often than not, you will end up killing him/her, in sheer revenge. But, you will be penalized next round, instead of the actual tk'er.