I remember using Endnote for one of my assignments at UCL and getting everything crossed out in red pen. It was my fault for not double-checking but I was relying on it to work! I vowed after that to do all my own referencing! However, I'm sure things have improved and, as I receive lots of referencing enquiries from students, I should really have another go at using these tools.
I regularly teach referencing at my institution but have never had to teach them how to use software. I think it's important that they know the basics first so they can recognise if anything has gone wrong! Higher Education students I work with are taught how to use either Endnote or Refworks depending on their affiliated University, however, they are taught this by the library staff at the University, rather than at the College. They often find this incredibly confusing so I think I should learn how to use these so I can help more.
I had heard about Mendeley at the British Library exhibition at my first LIKE event. It sounded an amazing way of sharing research and connecting to the eminent people in their fields, however, I didn't realise at the time it also sorted out referencing. I guess the downside to it is that you have to download it and then can't just access it from anywhere (please correct me if I've got this wrong) on the plus side it should be safer to use than cloud based software which may still disappear or get taken over and change. I think it would be very useful to serious researchers and I would probably use it or Zotero if I were to rewrite a dissertation or start a PHD - not that I have any intention of doing that... I don't think it would be suitable for the majority of students at my current institution as they are just not writing at a level where they have pages and pages of research which needs organising.
I like that you can add pdfs to Citeulike, but you can also do this with Zotero. I think that if I were to recommend a piece of referencing software to academic staff or researchers it would be a toss up between Zotero and Mendeley but I would recommend Citeulike to the younger students as I think they would get on better with the layout. It is a shame it doesn't do in text referencing though which students often struggle with. Perhaps, after more practise and after reading other people's reviews I will change my mind.
My next job, however, is to refresh my memory of Endnote and Refworks for my HE students who have access to the software...