As long as the parties in the conversation understand what unpleasant fact is being talked about, and are thinking about it, an euphemism is quite acceptable.
But often...euphemisms are used to brush things under the carpet. When people don't want to face a problem, it's so easy to use a glib and more cosmetic term for it and forget about it. It's a quick fix to avoid thinking deeply about a problem...and that makes me uncomfortable. If I find a child without proper brain growth, I don't want to hide behind the term, "mentally challenged"....I want to see if something can be done to help the child, not docket it neatly and move on.
Another problem about euphemisms is that they often take on the very negative meaning that the original word or phrase used to convey. Gandhiji coined the term "Harijan" for the "lower castes" of our country...and today, the word itself has the same negative connotation.
However..if it's just to be able to refer to something not-nice in a socially acceptable way...euphemisms are not only good, they are often a source of humour as the listener works out what is actually meant, and smiles!
Sometimes euphemisms can also become unnecessary as the original word loses all its sting! There was a woman who exclaimed, "Oh, shit! I stepped in some doggie poo-poo!" To her, the word "shit" had lost all its bad aura, and it was only when she wanted to refer to specific dog-shit that she used the euphemism, "poo-poo".
Note my use of "ordure" above :) That, to me, is an acceptable euphemism!