I discuss melatonin's effects on sleep & its safety; I segue into the general benefits of sleep and the severely disrupted sleep of the modern Western world, the cost of melatonin use and the benefit (eg. enforcing regular bedtimes), followed by a basic cost-benefit analysis of melatonin concluding that the net profit is large enough to be worth giving it a try barring unusual conditions or very pessimistic safety estimates.
Full essay: http://www.gwern.net/Melatonin
I've been taking 1.5 mg of melatonin every night for the past two weeks (except for last night). It's hard to say exactly what effect it had, because it's confounded with another major change in my sleep habits. It seemed to me that it moved my energy levels towards "a little bit sluggish" relative to what I counterfactually expected had I not taken the melatonin. So if I had a good night's sleep, I seemed less energetic than I ought, and if I had very little sleep, I seemed more alert than I ought.
On Sunday night (Jan 17) , I got 5 hours of sleep and felt terrible on Monday. On Monday night I got 6.25 hours of sleep and felt very marginal on Tuesday. Last night I got 4.75 hours of sleep -- but I forgot to take the melatonin. Today I feel far better than I ought to on such little sleep. I'm going to neglect the melatonin again tonight and see what tomorrow brings.
ETA: Also, I noticed no change in the vividness or lucidity of my dreams relative to my baseline of rarely remembering any dreams for longer than 30 seconds after waking up.