All the fucking time, Patrick. For this camp project, I'm ripping off lives of people I've known and worked with wholesale, and have even gotten in trouble for it -- a guy I went to high school with tried to sue me last summer for using his name as one of the bad guys in a script that I'd stupidly posted on the internets.
I don't think it's hacky, after all, "write what you know, but make a ton of shit up, too" is sort of my mantra. I think, as has been said, writers have to put some of themselves or people they know into characters as a way into the story, as a way to be able to write the story.
There are two tricks that I've used to overcome this/branch out and avoid potential lawsuits in the future: First, don't use real names. Kidding. What I'll usually do is I'll take the framework of a person's life and then build upon it, either inventing new traits or combining those traits So for example, the "athletic, energetic, dedicated girl who likes to party" turns into "athletic, dedicated girl with self destructive tendencies," or "British music lawyer" becomes "British public defender with dead wife and kid" Sometimes this works, but sometimes -- as in the case of one of my characters -- a person's real life is just too goddamn compelling not to borrow large bits from; which is usually when I'll ask for permission re: the actual subject. This was the case with the camp project, there's a woman I work with whose life seems right out of an independent film and her story could easily support her own film, but in creating a character based on her for the project, I made it pretty clear I was using a lot of stuff from her life and her personality and wanted to let her know I wasn't trying to make fun of her, etc.
The other thing, when it comes to putting yourself in the story, again, what I'll do is I'll take various traits that I have, often negative ones, and throw them into different characters. Usually there's a character that's a direct analogue to me, but since, more often than not, I tend to write about women these days, that's not always the case. So it's more along the lines of throwing an interest I have into one character here, a personality quirk there, and dividing up those aspects of myself helps me stay fresh and not just write "struggling writer who hates himself, no. 2001."