The Raspberry Pi is a credit-card sized computer that plugs into your TV and a keyboard. It is a capable little computer which can be used in electronics projects, and for many of the things that your desktop PC does, like spreadsheets, word-processing and games. It also plays high-definition video. We want to see it being used by kids all over the world to learn programming. 
This post will discuss the need and usefulness as well as short installation instructions of heat sinks for the Raspberry Pi. Information is related to the Raspberry Pi Model B (512 MB RAM)
Is it necessary?
The question often comes up, is it necessary to use some sort of cooling on the Pi or is it fine as it is?
From an engineering perspective it is most likely not necessary to use an additional heat sink. A product for sale should normally work "as is" without any major source of failure or a need from the consumer to do changes to the product. Maybe that is only my perspective in general, but the point has been made.
The ARM11 processor powering the Raspberry Pi Model B is used in a range of mobile devices that do not have any cooling, except for passive cooling heat sinks maybe. Forums and other sources say  that heat is not an issue with these chips until about 100 degrees Celsius (212 Fahrenheit). It is very unlikely that one would get to such temperatures under any sort of normal usage.
Why Use a Heat Sink then?
|Thermal view of the Raspberry Pi Model B (Source)|
It is a personal choice to use a heat sink on the Raspberry, but as mentioned above it is absolutely not necessary. So what might influence you to buying a heat sink for your Raspberry?
- Hot environments and overclocking
- The looks of the device and peace of mind, knowing it will not overheat
- Continuous heavy load and overclocking
- Because you want to do it
Normal Operating Conditions
During normal usage my Raspberry in its original case is operating in the range of 46-48 C, based on my own measurements. This is slightly less than the temperatures of 51-53 C measured by Thomas  for an enclosed idling Raspberry Pi. Possibly due to the fact that I am reading off the values via a software whereas he was using thermal imaging.
Either way, these values are well within the operating limit and shouldn't cause any issue any time soon. However, I would sleep better if I knew that there was some sort of extra heat removal method on my Raspberry when I'm not at home and this little thing is working at full load.
Overclocking is the process of increasing the clock rate of the Raspberry Pi's processor. By default it is running at 700 MHz, however even from the default firmware this can be increased to 800 MHz or even further to 1 GHz.
Overclocking increases the speed of the processor, however it also means a higher energy consumption and therefore more heat generated. The temperature of a processor has nothing to do with the performance of the processor (speed), but rather its lifetime. At higher temperatures a processor is more likely to fail compared to one operating at lower temperatures, refer to image below.
|Semiconductor lifetime with increasing junction temperature (source )|
Hence it is of best interest to keep CPUs at as low temperatures as possible.
I am still running my Raspberry Pi at the original 700 MHz and do not plan to overclock any time soon. If I will need an increased performance I would look into it, but for now I do not see the point for my usage profile.
Which Heat Sink to Use and Where to Put It?
I went for Aluminium heat sinks (from eBay) which were exactly the right size and made for the Raspberry Pi. For easy application I chose the ones that have some thermal paste sticker on the back, so it is literally as easy as peeling off the back and aligning it properly on the chip.
|Aluminium heat sinks ready to be glued onto the chip|
|Aluminium heat sinks applied to the Raspberry Pi|
I would say position or aligning the heat sinks (which way the fins are facing) is barely going to affect the already small efffect they make. If you have an air flow over the Pi then from a heat transfer point of view it is more efficient to have the fins parallel to the air stream so that it moves between the fin and removes more heat. Nevertheless, do not worry about this as it will not make a significant difference, especially if you are using the Pi in a standard room condition without overclocking.
Be careful when position and dropping the glued heat sinks onto the board as they stick fast and removing-reapplying them may reduce the contact surface between the heat sink and the board. Apply pressure gently to make them stick nicely, but avoid damaging the board.
If you want to put some heat sinks on your Raspberry Pi because you are worried about it "burning out", then you probably do not need heat sinks. In some of the above mentioned use scenarios you can consider, but chances are it will not make much of a difference.
If you love tinkering with tech, want to learn a little about the RPi and are curious, then go ahead, It isn't much work nor does it cost a lot of money, but you will have a slightly more customized Raspberry Pi.
References - http://www.raspberrypi.org/faqs
 - http://blog.oscarliang.net/raspberry-pi-heat-sink-do-you-need-it/
 - http://www.interfacebus.com/Integrated-Circuit_Derating_Guide.html
 - http://www.tooms.dk/?page=http%3A//www.tooms.dk/Tblog/Showblog1.asp%3FY%3D2012%26M%3D9