I have been playing Classical/Flamenco guitar for over three years now. I have NEVER heard anyone say not to use their pinky. On the fretting hand, its almost manditory, and for the picking hand, if you want to do strong vibrant strums or rasqueado, you HAVE to use the pink.

Now... I have heard that pinky is not meant to play blues and stuff. Thats why Jimi Hendrix never played with his pinky.