I still use a link cloaker -- not pretty links - but another tool.

That alone should have little to no impact on ranking.

Content, Content, Content.

I haven't heard that Google (via Penguin/Panda) has clamped down on on Pretty Links per se.

Affiliate linking is fine if you are providing enough value in your content.

If that is the case then the benefits of using a link cloaker like Pretty Links far outweighs any negatives - real or imagined.

I use it all the time.

Where have you read that Panda is clamping down on it? Thats wrong and makes no sense.

I use it to cloak URLs, so that the link is able to be used on sites without it looking ugly, and for passing filters in YouTube etc.

So you cloak something like

amazon. com/adidas-Calissage-Mens-Slide/dp/B0007Q3X4W/ref=pd_ts_zgc_shoe_679320011_4?ie=UTF8&s=shoes&pf_ rd_p=1384213562&pf_rd_s=right-5&pf_rd_t=101&pf_rd_i=507846&pf_rd_m=ATVPDKIKX0DER &pf_rd_r=124QBWDMFWR04F9890B2

into

mysite.com/adidastrainers

You use this on your site to mask your affiliate links. I also use it for YouTube video descriptions. You have nothing to worry about imo.

I always cloak all my affiliate links, and I know of many advantages and no downside to doing this.

This doesn't prove anything, but I also know of no reason you shouldn't use Pretty Link.

On no account use a third-party url-shortener/redirector - that's all downside.