We create all of our prototypes in HTML and we throw ALL of them away.
We make prototypes in HTML for web applications, desktop applications,
mobile phones (sometimes), and touch screens. It has worked wonderfully.
We prototype very early and make our prototypes look like crap ...with
everything in grey and lots of smoke and mirrors. I wrote an article
about our process here: http://www.boxesandarrows.com/archives/html_wireframes_and_prototypes_al
Although I can see the value in creating something that will be
implemented, my first priority is to create something highly usable. So
I don't see the value in tying my hands down in the design process
because I am concerned with making my prototype have an afterlife. I
don't think that the trade off is worth it. However, the value in having
something interactive to user test by IMing it to someone or quickly
doing some other type of remote study so that I am constantly getting
feedback is priceless.