Of course what J. Brunner said is true ("What persons call "diffused" light...), because that is what diffusion is. It does not mean that there is no use for flash diffusers, however. I use them when there is just no alternative, like a nice ceiling (e.g. most weddings). They are certainly better than nothing. If in studio, there are better options, but if you find yourself in a situation in which you must use on-camera flash, anything is better than nothing. Just think about the size and shape of your light if you want to decide between diffusers.
I normally use the dedicated diffusers on my Sunpak 555, but just borrowed a Canon 580 with a Gary Fong Photojournalist thingy on it. Results are actually quite like a Speed Graphic with the 5 inch right angle reflector, but with slightly softer edges on the shadows. The size and shape of the light source of the two are about the same, but the Gary Fong thingy is frosted, not chrome. Shooting it in the dark, it still looks like a flash. Outside for fill, it is better than nothing if you are working hand held and quickly.
I do find the Gary Fong thing is unwieldy (and ridiculous looking).
Also, it is $40. I know because I lost the one I borrowed (because it was unwieldy and got knocked off) and had to replace it for my friend. The $150 thingy the other fellow talked about must be ultra fancy or something.
As for generics, I would feel OK trying one, especially at ten bucks. They are very simple gadgets. There is not a whole lot to screw up, or even skimp on, with a reverse-engineered version...except, of course, labor, employee benefits, taxes, insurance, and other costs. The Gary Fong versions are made in the U.S.A., however, so for only $30 more, you are helping someone here keep a job, helping to keep a U.S. business alive, and contributing to the amount of income our governments receive.
An example:
Still looks like a flash, but looks notably better than a bare flash. What were my options to get this pic? Set up a light stands, perfect the lighting with the ideal modifiers, and meter the flash? I think not. On-camera flash was the only way, and the diffuser helped make the compromise a little easier to stomach.
Personally, a lot of the time I use flash, I
want the light to look like flash. Actually, the look of this particular flash rig that I was using was just perfect for the mood I wanted to create with my dance floor shots. For everything else that night, I used fast lenses, high ISOs, and the overhead tungsten lamps.