It depends on whether they're modifying the database. The latest location module modifies the db but I have issues (on my local test site) with the d5 release so I'm going to wait until I upgrade my site to d6 before I upgrade from my current version.
If the dev module doesn't touch the data, and I checked it out on my test site, then I wouldn't have a problem using the dev version. Several modules that I use are dev versions but admittedly none of them are as large as the date module.
It really depends on the module and developer. Some developers only commit updates when they are ready to go. Others commit updates constantly.
In the case of Date + Calendar I would test it on a test site first. If you don't see anything wrong go ahead and use it.
For the long version of what Matt just said, see my post Dev or No Dev? on groups.drupal.org.
Micah
The latest release for the Date + Calendar module for D5 (release 2.5) has a bug with repeated dates and exceptions. It's been logged as a bug and I also discovered it on one of my sites. However, the dev release of Date + Calendar (5.x-2.x-dev) has resolved this problem.
so the question is... would you use a dev release version of such a huge module on a live production site?