There are times here in Lebanon when the only fabric you can find are sheets, so I have used them. The weave is tighter than regular cotton fabrics, so this is the reason why many quilters discourage their use. If the sheet has been used and washed many, many times, it is softer and therefore easier to work with.
As someone says, there are no quilt police around here. If the fabric suits your purpose and you can work with it, use it. Like you said, for backing, it is ideal because you do not have to piece it and then deal with one more seam to quilt through at awkward places.
Connie