My simplewallet displays a "balance" and a "unlocked balance". My initial impression is that by unlocked the interface means "confirmed". But why the terminology? Unconfirmed balance should still be available for spending, as unconfirmed transactions... they're not "locked". Or does the current implementation of Monero rejects transactions with unconfirmed inputs?

I can see one reason not to use unconfirmed inputs: it becomes kind of obvious which inputs in the mixin are the real ones. Unless wallets adopt as a technique to include unconfirmed inputs of others in the mixin, but that comes with the problem of making your transaction confirmation dependent on the confirmation of somebody else's transaction. So perhaps the safest approach is not to use unconfirmed inputs.

But if the user really needs to make a payment quickly, wouldn't it be better to give him the choice? Plus, I suspect some services need to be able to transact quickly. Exchanges for ex., can they really afford to never send transactions with unconfirmed inputs?