After Google launched the disavow link tool in mid-October, there were a fair amount of doubters and those that claimed it doesn’t work. Dixon Jones from Majestic SEO, a well known and respected member of the SEO community posted in a Google+ thread that he used it for a site and it worked to remove a manual link penalty.
SEO Roundtable has the exact posts he made explaining the process and what happened. For Jones, the manual penalty was removed fairly efficiently, but those wanting to use it for a Penguin link penalty may need to wait for a new refresh.
The best option is of course to try to avoid link penalties or bad links, but the world isn’t perfect. If you’ve dealt with the root issue which caused the penalty, the disavow links tool may just be the solution you need.