You don't see too many people using guitar capo's - in fact I know some guitar players jokingly call them 'lady fingers' - but the fact is you can get some really cool and unique sounds out of your guitar, completely different from what you normally hear, simply by knowing how to use a guitar capo.
Using a capo is the easiest way to transpose something, and can work great if you want to play a song that is in the wrong key for your voice - simply move the capo to a place on the neck that works with your voice, and away you go!
Another very cool feature of using a guitar capo is that you really change the sound of the guitar; if you move it a ways up the neck the guitar can even start to sound a bit like a mandolin or another much higher instrument. If you're clever, you can use this to your advantage and create some very interesting sounds... this is a great technique for adding a second guitar part to a song you're recording for instance.
Just be careful though, if you're playing with other instruments, you're going to need to be careful to transpose the chords that you're playing, because you are actually playing different chords once you capo the guitar. For instance, a normal open G chord, with the capo at the second fret, becomes an A chord.
One thing to keep in mind is that applying a guitar capo changes the tension on the strings, and as such, can alter the tuning of the guitar. Make sure you check your tuning after applying a capo, as well as after you've removed it. (See related post: How To Use A Guitar Tuner)
Video Problems? Watch How To Use a Guitar Capo on Youtube