In pursuit of the tone - namely the sound of Wes Montgomery - I abandoned using a pick several years ago. While it has is drawbacks when I'm looking to strum (especially in say a funk context) I'm a convert otherwise: It's fine for comping, and great for chord soloing and single-note octave lines. I find it affords a much greater range of tonal colours and expression: Virtually never use the volume knob anymore, except to set an initial level, any volume modulations I need can be accomplished in a "tactile" manner. For that matter, I never end up touching the tone knob, as a wide range of tonal colours are a literally at ones fingertips when playing without a pick. While Wes only used his thumb while resting his fingers on the guitar, I've found using my index, middle and (on occasional) ring fingers - in a sort of hybrid classical guitar technique, though without any nails - is what's working for me.

At the time I became interested in choosing not to pick, I was also looking for a way to more readily execute wide intervallic leaps, and integrate right-handed tapping techniques. Not so much in the interest of being the next Van Halen, but actually in pursuit of certain Coltrane/Dolphy-type possibilities. Conventionally cross-picking a line of wider intervals that alternate between, say, the low E/A strings with the top strings always struck me as a lot of work (a job best left to the John McLaughlins of the world). Finger-picking these types of intervals is comparatively simple, however.

So, though I certainly can't recommend ditching the pick for guitarists across the board - I'd definitely in the camp that it has it's merits for the jazz player in search of a warmer, more pliable tone, and perhaps the opening of other some doors leading to different shapes in your lines.