Jeffrey Zeldman has written an interesting article on URL shortening and, more specifically, how he rolled his own using a plugin for WordPress. He also points to an excellent article written by Joshua Schachter, describing the benefits and pitfalls of link shortening utilities. Both articles are worthy reads. I suggest reading Joshua's article before Jeffrey's.
Do you use URL shortening services? I mainly use bit.ly at Twitter, mostly because that's what everyone else seemed to use. Have you found some services to be better than others?