DARPA (the Defense Advanced Research Projects Agency, part of the Pentagon) has called for proposals to develop "insect cyborgs" that could be used for remote-controlled reconnaissance ("bugs"). According to DARPA, "Through each metamorphic stage, the insect body goes through a renewal process that can heal wounds and reposition internal organs around foreign objects." The foreign objects would presumably be chips, nerve probes, cameras, microphones and other equipment. DARPA defines success as landing "an insect within five metres of a specific target located at a hundred metres away." Presumably, you'd use something similar to the remote control for a model airplane.
There's something inescapably weird about this idea. ("Igor! Fetch the chigger!" "Yes, Master!"), but it's worth treating seriously if only because a lot of public money will probably be spent on it. I suspect they're using insects rather than birds or bats because 1) insects mostly do their metamorphosing in the open, so surgery is easier and 2) animal rights activists won't complain if the government slaughters a few dozen beetles in an experiment gone tragically awry.
In terms of utility, a remote-controlled insectoid could certainly be helpful for reconnaisance, but also for much more. For example, it'd be good for carefully-targeted delivery of certain diseases (think malaria, a specialty of the anopheles mosquito). In fact, a platoon of them could infect masses of enemy soldiers and thus, perhaps, end a conflict before it could properly begin--a way to use germ warfare without the risk that it would spread out of control (unless, of course, you lost control of your insectoids). I'm trying to work out how to end this item on an "up" note, but it's tricky. I'll just point out that lots of military technology eventually makes its way into civilian life and that police, private detectives and peeping Toms can all look forward to a bonanza of new opportunities.