This is a great spell for warlocks in arena. With all the curses a warlock has, a priest will be forced to dispel, which results in the direct damage.
In PvE, this spell is just another DoT. Most raid bosses do not dispel, and therefore the damage and silence of effects of dispelling this spell are wasted. However, affliction raid specs should still use this spell in raid settings, since its damage done per second casting is still higher than [Shadow Bolt].
In PvP, it can help prevent your DoTs from being dispelled safely, as its secondary effects can cause significant damage to the dispeller.
Patch 5.2.0 (5-Mar-2013): Unstable Affliction’s backlash effect is now always a critical hit and deals approximately 15% more damage.
Patch 4.1.0 (26-Apr-2011): Unstable Affliction damage done when it is dispelled has been doubled, but this damage can no longer be critical.; Damage dealt by Unstable Affliction when it is dispelled now properly benefits from Shadow Mastery.
Patch 4.0.6 (8-Feb-2011): Unstable Affliction’s silence effect has been reduced to 4 seconds, down from 5.
Patch 3.3.3 (2010-03-23): Tooltip clarified to state that this spell is exclusive with Immolate.
Patch 3.2.0 (04-Aug-2009): Immolate and Unstable Affliction: All ranks of these two spells will now overwrite each other.
Patch 3.1.0 (14-Apr-2009): Feedback damage from dispelling this debuff will no longer be modified by effects on the victim which modify the damage the victim does.
Patch 3.0.8 (2009-01-20): Will now gain the correct damage modifiers for the creature type of the target.
/Patch 3.0.2 (14-Oct-2008): Silence effect reduced to 3 seconds, down from 5.
Patch 2.3.0 (13-Nov-2007): The silence from this ability is now subject to diminishing returns.
Patch 2.0.3 (09-Jan-2007): The feedback from dispelling "Unstable Affliction" is now affected by "Shadow Mastery".; "Unstable Affliction" is now improved by the talent "Shadow Mastery".