Alot of the times I agree that it can fuck up an album, but this is expecially true if it is placed at the beginning or end of an album. So, if at all, I say throw it in the middle.
I see covers as encores as in not really part of the set, just some good friendly violent fun; put them in the end of sets as well as albums (if on albums at all)
I generally prefer never, but covers are cool sometimes. Only at the end though, especially if it's a band covering a song fairly dissimilar from that of their own. Brutality covering Black Sabbath in the middle of the album, for example, is fucking stupid.
Agreed, even the most imaginative covers often don't fit in with the rest of the album (which is why the bonus track was invented), and in live performance they often come across as a way to get cheap applause...
Bonus tracks for obsessive fanboys, or occasionally concert closers if it's something that the whole audience knows - Overkill and Exodus being examples of good Closer Covers.