I do have a cf-adapter and 1GB cf card working in A1200. Its a bit faster then a real 2.5" harddrive because of no spinup and nearly no seek time. It also spare heat, space and power consume.
On the other hand any flash memory is wearing-out by every write access. Using flash memory as a mass storage device, its durability will shrink against usage as generally storage in mp3/digicam/etc. devices.
Also the desired cf card MUST support the IDE standard! Most Sandisk and Kingston do. If this mode is not supported by the cf-firmware it will not work as an IDE drive insinde the Amiga.
Beside this some cf-card dont work correctly with the Amiga reset signal line. If so, the card will not be seen after exiting the kickstart boot-menu (early startup). A possible fix will be to cut line #1 on the cf-adapter pdb to cf-card.