I think it really depends on what you're trying to do. I like using iSCSI in the guest as it can simplify the setup for things like MS clusters. You don't have to worry about things like vMotion or HA or the compatibility mode of the iSCSI RDM when you attach inside the guest.
I guess for me the con is that it in some ways complicates your networking at the ESX host level. You'll need to give guests that are iSCSI attached at least two NICs (more if you want to do in-guest MPIO) and configure your vSwitches such that you have port groups for regular server traffic and iSCSI traffic. That may complicate the setup of your vSwitches a bit. I don't think it's necessarily bad, just requires a little more thought and planning up front.
Using in-guest initiators are also great for things like attaching to SCSI to iSCSI bridges. I've had a lot of success using those bridges to present SCSI tape drives/libraries to virtual machines without having to do the ugly pass-through at the host level. This lets me virtualize my tape backup server while still allowing it to vMotion or move around between hosts in the cluster without being tied to a specific host because of hardware.
What is the goal? Just looking for info or do you have a specific configuration in mind?