Recs.
Updated
SpecsUpdate
Pros
Pro Preprocessor support
Filters make it easy to embed compiled languages such as coffeescript or markdown directly into the template. A filter will allow you to keep your inline code and content consistent with the rest of your codebase so you can continue using your prefered language with your outputted HTML.
Pro High performance on the server and client side
Apart from their functionality all template engines need to be efficient in terms of the time they require to render a page. Jade beats most of its competitors in this area, it is highly optimized to deliver good performance on both the server and client ends.
Cons
Con Unforgiving in case of indentation errors
The structure is entirely determined by the indentation. That means that indentation errors will ruin the end result, often without an easy way to find the error. Indentation errors are easily introduced by copy-pasting, by rearranging code and by working in a team where not everyone uses the same indentation style. (E.g tabs vs. spaces.)
Con No HTML syntax
When working with templates it's extremely important to understand the HTML elements at play, and to see them as natively as possible. Jade removes this, making developers have to do the abstraction in their heads.