I was in a country band in the late 90's and the lead singer used one extensively. He had each song programmed so that it would change chords when he hit a footswitch - if the chords of the chorus were D, G & C for example he'd have them each programmed in so he'd be tapping the button every time we changed chords... and if we ever wanted to do an extended version of something he'd be frantically hitting the "Back" button to add another chorus or two worth of chord changes.
The sound was pretty good, though. In a concert setting it would have stood out as weird, but in a bar setting where people were line-dancing and drinking it sounded really slick and professional. I imagine the new ones are a lot better - this one didn't take any pitch input from the guitars or anything. I think it was much like a guitar harmonizer, adding a 3rd and/or 5th or whatever intervals you chose above the note that you were singing.
I should note - he was a very good singer on his own, very accurate and consistent, and I think that helped.
Also of note are Pitch Correctors. My GF(now also Fennario's Donna)'s Beatles tribute band all uses them and it's really taken their harmonies to the next level. I borrowed hers for a four-piece Wednesday gig we did last year and it was really interesting... I'm far from a good singer but as long as I knew about what note I wanted to hit it took me right there. It didn't even sound weird, it sounded exactly like my voice if only I had more accurate pitch. For $250 I'd sure get one if I were singing a lot of backups.