According to this early study as reported here by Luke Wroblewski, chief design architect at Yahoo! Inc., by changing a standard web form to a mad lib style (plugging text into a designed letter format) will increase conversion by 25 to 40%. Reposted below is an image to compare the changes made to this car dealership website:
My thoughts: a little more human, fun and interesting because it’s different from the expected, but if because of its new success, I see most websites using it, I’ll find the whole concept redundant and inefficient. The increase in conversion is probably due to novelty, if anything else.