According to Wikipedia LFSRs are used as PRGs but due to their linearity they are easy to cryptanalyze. Also, using Berlekamp-Massey consecutive output bits allow reconstruction of the internal LFSR state (I think the rule was something like $2n$ bits for state size $n$).
LFSRs are very useful as building blocks of ciphers, with some nonlinearity introduced. For example Trivium is a very strong and fast cipher, which includes a little amount of quadratic nonlinearity in 3 coupled LFSRs.
An example of bad use of LFSRs--and by no means the only one--is the A5 series of ciphers, of GSM fame, where majority clocking does not include enough nonlinearity/unpredictability.