I’ve used small sherry glasses in a couple programs, and I find them wonderful for a variety of purposes behind the bar. I agree with @FrankCaiafa about the problems with breakage, but I tend towards more casual atmospheres and thrift stores (particularly on the Upper East and West Sides) have so many of these for a pittance. Mismatched glassware, sure, but elegant and certainly not lacking charm.
When I do see them behind a bar, it often feels like the forlorn Galliano bottle of yesteryear–some bar manager or overoptimistic head bartender ordered it thinking it was necessary or that they would use it in something charming and innovative. But now they gather dust and no one working the bar can even tell you why they are there in the first place.