When would I use this function in favor to String.equals()
when you need speed since you can compare strings by reference (== is faster than equals)
Are there side effects not mentioned in the Javadoc?
The primary disadvantage is that you have to remember to make sure that you actually do intern() all of the strings that you're going to compare. It's easy to forget to intern() all strings and then you can get confusingly incorrect results. Also, for everyone's sake, please be sure to very clearly document that you're relying on the strings being internalized.
The second disadvantage if you decide to internalize strings is that the intern() method is relatively expensive. It has to manage the pool of unique strings so it does a fair bit of work (even if the string has already been internalized). So, be careful in your code design so that you e.g., intern() all appropriate strings on input so you don't have to worry about it anymore