There have been some recent slashdot posts (linking to a news article) on in-class response systems ("clickers", rapid-response systems, etc.) It's exciting to see the technology getting the press it deserves, but the links show that manufacturers are still pushing educators to use these devices for administering tests and quizzes.
I have trouble imagining worse uses of the system.
In-class response systems are designed so that instructors can get immediate feedback from a classroom; each student has a transmitter, and when the instructor asks a multiple-choice question the students transmit their answers to a receiver in the room. I've described the basics of in-class response systems here, and have posts talking about the positives and negatives of the systems (and have an archive page of all my in-class response system posts).
In-class response systems are great for assessing student opinions, encouraging student self-evaluation, and helping the instructor get data on student comprehension. That's what I use them for, and I absolutely love them (and so do the students; in the last year I've often gotten >90% positive feedback on my student evaluations of the system).
However, when it comes to using the systems for tests and quizzes, the devices fail miserably. Consider how the systems work: the transmitters are essentially remote controls with numbered buttons on the front, and each student pushes the button corresponding with their answer choice. In the systems I've used, every student is answering the same question at the same time; all students have to do is glance at their neighbor and they can immediately see what button their neighbor is pushing. Or, if the students wanted to be a bit more malicious, one student could just hold their transmitter up high enough for other students in the area to see the button, and voila, they can cheat virtually undetectably. Also, since everyone's answering the same multiple-choice question at the same time (you can't do multiple exam forms), there's ample opportunity for other cheating methods to come into play (e.g., neighbors talking, hand signals, M&M's on the table, cell phone text messaging).
But cheating isn't the only problem these devices have. Not surprisingly, there are numerous technical problems that can occur: I've had cases where a student's answer choice isn't received by the receiver, transmitters break in the middle of a lecture, and transmitter batteries die. I've also had students forget to bring their transmitters to class (they are just one more thing to remember, after all). In my classroom, where the transmitters are used primarily for discussion and self-evaluation, none of these problems matter. A student's transmitter breaks during lecture? No problem; it's only participation points, and we can work on getting it fixed for next time. On the other hand, if a student's transmitter breaks during an exam, the student is going to be extremely stressed out, and may not even realize that the transmitter is broken until well into the exam.
The learning curve for using the transmitters is admittedly short (push the button, look for your ID number on the screen), but some students do have trouble using them for the first few days (not turning them on, not being able to verify that their answer was received, etc.). If the first time students use the devices is on a test or quiz day, problems will abound.
As a final note, I've also seen marketing material saying that these devices can be used to take attendance. This is an awful idea. All students have to do is collaborate so that one student brings everyone else's transmitter to class, and suddenly everyone is there. Compound this easy deception with the array of technical problems that can (and do) occur, and you have a cumbersome, failure-prone attendance system.