My own experience is that sniping on ebay is most beneficial when used for items whose value is less known in advance (e.g. rare coins or items with unstable price). Submitting your bid early is a valuable information for other bidders and you should not do it (definitely use sniping). On the other hand, if the value of item is well known and stable (e.g. electric toothbrush), you may be better off submitting your bid early due to ebay bid increments (that favor early bidder).

As for the sniping software / services used, this used to cost some money a while ago, but now I can see several free services. I used to pay for esnipe, but now I use Gixen (http://www.gixen.com), which is free.