It is not without it's risks. The basic idea is what djcool said, it helps bacteria breed which take up nitrates and phospates that are also required for bacteria to breed. The problem is the bacteria take up a lot of O2 to do this, in tanks that are a little low on O2 already, fish and corals can sufficate.
All this removal of nitrate and phospate via uptake by bacteria is fine, but without removing the bacteria, you are still in the same place, or a worse place then you were. This is why it is VERY important to have a great skimmer working at maximum efficancy to remove the bacteria before it dies from lack of fuel (i.e. vodka gets used up).
I started a thread about this a little while ago, and tried it. It was not a sucess for me, but I had other problems as well and don't blame the failure on the Vodka, I know one person with a very successfull SPS tank that uses it. Do a search for that thread, there is lots of great information in it.
HTH,
Whiskey