My two daughters and many of my friends' babies used this method. Very good method indeed. It seems to be a little cruel. But I do think it make both babies and mothers get better rest. And all those babies I know are very healthy. No psychological problem found.
It really depends on how you use it... it is OK to let your baby to cry for a few mins (My case would be 5 mins) If you want to train your baby to fall asleep him/herself, you may consider doing this
1. Put her on bed when she is awake (make sure she is full and burp and nappy is clean)
2. leave the room and let her cry for a mins
3. go back in and pat her for a min (no eye contact)
4. if she keep crying, let her cry for another min
5. go back in and rock her (no eye contact)
6. if she keep crying again, let her cry for a min again
7. go back in and give her a dummy (noeye contact again)
From my experience, my BB will fall asleep in 15 mins, and after 2 weeks, she can fall asleep herself without crying much (less than 2 mins normally) Sometimes she didn't cry at all
When my son was 1 month old, I started using this method, and he could fall asleep on his own after one-two weeks. He is now 17 months old, and he is a happy baby. When my son cried, I would take a look at him from time to time, saw if he was ok and then left the room. We only let him cry when we were sure he was sleepy and not having any other needs.