When should I ditch a pot with teflon?
Ehow has an article on the specific dangers non-stick coatings can cause to humans and pets including fumes from heating a pan to too high a temperature,  which I was unaware of.  

Of course, if the coating is flaking or fuzzy-looking, actual coating material, which is a carcinogen, can leach into the food cooked in the pan.

Link to the Ehow article:
http://www.ehow.com/list_6531918_dangers-using-teflon-cookware.html