Doug Berman links to an interesting article discussing the use of - choose your term - "rats," "snitches," and "informants." My biggest problem with informants is this: While in the past police used small fish to catch bigger fish, today's informants are often the most deadly members of a criminal organization. Because many drug arrests involving a numbers game - much like a sales quota - police are using sharks to catch small-time criminals. In addition, while this would be impossible to prove empirically, my intuitive sense is that informants actually create more crimes than they help solve - usually by involving people who were not committing any crimes at all when approached by the informant.
The government should solve, not create, crimes. Offering an existing member of a criminal organization leniency for his testimony is one thing. (Think Sammy the Bull serving 5 years for double-digit murders in exchange for his testimony against Jon Gotti.) Arresting someone and then telling him, "Go see how many guys you can get to commit crimes with you," is something entirely different. More often than not, informants are used to create crimes that would not have existed absent the informant's participation.