Here’s what my new Oxford dictionary (the one built-in to the Tiger OS) has to say about the subject:

USAGE: Utilize, borrowed in the 19th century from the French: utiliser, means ‘make practical or effective use of.’ Because it is a more formal word than use and is often used in contexts (as in business writing) where the ordinary verb use would be simpler and more direct, utilize may strike readers as pretentious jargon and should therefore be used sparingly.

Yep.

“Utilize” connotes using something for other than its intended or obvious purpose. You might utilize a screwdriver to pound in a nail; saying “utilize” here conveys something that “use” would not. The Merriam-Webster Dictionary of Synonyms and Antonyms gives another good example: “meat processors utilize [i.e., find a novel or profitable use for] every part of the animal.”

I know it’s overused (and inappropriately used), but kept in its place, it’s a perfectly cromulent word.