My experience with it in a recent play-by-post game was that it was nearly a disastrous experience for the game...
The one player experience I can think of I had with taking prisoners ended up similarly to IronWolf's story, though the players didn't take it personally and we moved on with the game after a while.
We were playing in Eberron and the party was a group of misfits working for the Brelish government (it's been a while, so I forget the name of the group we were a member of... was it the Blades?). My character was a knight (this was a 3.5e game) trying to be honorable to work off a curse given her by the Silver Flame. (It's a long story, but that character had some very complicated motivations.)
We were attacked by bandits while traveling and due to circumstances we managed to defeat them in a way that left most of them alive. We had not intentionally done so, but we had prisoners.
Me and another PC argued about it for a while whether we should take them to a nearby town for a trial or just hang them here as bandits. I argued that not only was my character extremely lawful, but we were playing members of law enforcement in a setting that prided itself on being a more "modern" fantasy setting with governments that should (in my opinion) believe in things like "innocent until proven guilty" and "trial by peers". The other PC (who was actually played by Hussar) argued that, as members of law enforcement, we had the authority to hang them right here as bandits.
I think we actually turned to the DM here and asked him what his interpretation of the law of this world. I don't remember what he said, actually, but I seem to recall that he wasn't sure how to rule here (he was a new DM and this was his first game as the DM). I don't think we actually executed them in the end, but honestly I don't remember what happened to them. I think we figured out some way to get them to the nearest town without us actually taking time out of our quest to bring them there.
In the one and only game I DM'd I had one of the kobold raiders surrender after he saw his companions cut down in a matter of seconds. I think the players had a lot of fun with that captive. I had him escape once, but he was headed in the same direction as the players so it was not that difficult for them to capture him again. They threatened to execute the little bastard several times but never actually went through with it, and I at the end of that mini-campaign they decided to keep him as a sort of pet.
I'm a believer that prisoners should be taken when appropriate, and the players shouldn't necessarily be "rewarded" or "punished" for it. It really depends on the world and the opponents. There are cases where it's acceptable to take prisoners, get them to talk, and execute them, and there are cases where anyone not killed in battle should be brought to a place of justice to face a trial. It depends on the type of campaign you're running.