http://oreilly.com/pub/a/windows/2005/02/08/NTFS_Hacks.html

By default, NTFS creates an 8.3 filename every time it creates a long filename, which adds a bit of time to the file creation process.

One can disable that using:

fsutil behavior set disable8dot3 1

Is it a good idea to do it on a Windows 7 machine running on a SSD drive?

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16 bit apps use 8.3 filenames.

By far the most prominent 16 bit apps are Setup programs. Not a lot of them, but some.

Like any setting, I'd test all your applications just in case. But for the most part, you should be ok.

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8.3 can be handy when you are trying to remove a file which somehow came to have invalid characters in its filename. – horatio Sep 16 '11 at 14:13
Much truth in your statement, but beware the Dark Side of the Force! – surfasb Sep 21 '11 at 22:05
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