CareerJournal has an excellent article on the use of personality testing to screen job applicants.
Such testing can be helpful, but it also has some dangers, not the least of which is exposure to Americans with Disabilities Act claims.
One observation that I'd add from experience is that the type of employer that rushes to use such testing is the same type that rushes through the selection process. They want some magic mood ring to sort out candidates and don't want to do the hard work that a thorough selection requires. Some outfits spend more time determining which computer to purchase than in personnel selection and yet hiring an employee is a far more costly and important decision.
Read the article here.