When should you use and not use Etags?
Solution 1:
The main argument I have seen against them is that files that are common to many servers will have to be grabbed over and over again by the client. Better is to include a version string in the name of the file itself.
So for example, if you round robin load balance your web servers each server will generate its own ETag causing the client to grab it multiple times.
You can read more on the yahoo high performance website blog. The summary of this is that you can make it work but you have spend the time to configure it right.