In an earlier blog I talked about the environmental benefits of gift cards (pre-paid credit cards).
Now
I can report on the other, possibly darker, side. Gift cards are
currently a preferred form of bribery in pro-bribery countries. My
reliable expert who works in China reports that it is very common for
people shaking hands to be passing a gift card bribe between them. 
No
record of the transaction and no tell tale piles of currency.
I am also told by another good friend that when her purse was stolen, her credit cards were used to immediately buy gift cards (because they are cash and untraceable).
There is an obvious, but unconfirmed,
potential for laundering money with gift cards. Just take a bundle of
cash into a store, buy gift cards, then use the cards to pay
employees. Whatever the employees are building for you will show up as
a miraculous capital gain that didn't cost you anything. Now pay taxes
on the capital gain.
You'll note that laundering money is about finding ways to pay taxes on cash so that the wealth can be public. I strongly favor the government encouraging laundering money (instead of making it illegal) because it means more taxes paid, rather than kept out of the tax cycle.