When the case of the letters in the URL cannot be conveyed – then you should not use Bit.Ly. A perfect example would be when you need to give some one a URL over the phone (or a podcast) – unless you dont mind saying “uppercase A, lowercase x, uppercase C”.
Here are some examples:
http://bit.ly/Yr7qw – goes to MSDN article “When to Use MSDE”.
http://bit.ly/Yr7QW – goes to GumTree.com (a weird dating site!)
You get the idea!
All of the above resolve to the same MSDN article.