Very interesting discussions over the advisability of permitting married priests, here and here. Please sit before you read this: I find a lot to agree with in both posts.
To complete the wishy-washy foul shot, I disagree with arguments at both, too.
Unlike Chesterton, who said priestly celibacy was the main stumbling block for his conversion to Catholicism, I'll admit to not being particularly invested in the necessity of it, for the following reasons:
1. My Methodist background, which always involved married pastors, makes the concept of married men in ministry ("Don't practise your alliteration on me!") unremarkable. It doesn't cause me to reject arguments for celibacy, either--it just means that I come to the argument with a different mindset. It doesn't generate the same light or heat for me as it does for other people. Because of that, I think I find the concept a lot less jarring than do cradle Catholics. I suspect that even applies to cradle supporters of a married clergy. Your mileage may vary.
2. The witness of the Eastern Catholic Churches. A married priesthood has been part and parcel of the Eastern tradition, and still is today. After a considerable struggle, the Byzantine Church in the U.S. has, more or less, regained the right to ordain married men in America again (following a monumentally stupid decision to impose celibacy back in the 1920s, which created hundreds of thousands of new Orthodox). Other Eastern churches (esp. the Ukrainians, IIRC) have been getting around the ban by ordaining married men intended for ministry in the U.S. overseas before sending them to their parish assignments here.
In any event, the Byzantine situation bears watching to see if new vocations result.
3. The Pastoral Provision for the ordination of married Episcopal and Lutheran ministerial converts since 1980 at the very least tends to undercut the universal necessity.
In other words, it is a discipline from which a man can be dispensed for good reasons and still be permitted to function as an active diocesan priest. Another valid question it raises is why there should be a preferential option for Episcopalians and Lutherans.
As an interesting aside, the roots of the Pastoral Provision started with Pius XII in the 1950s, who permitted the ordination of two married Lutheran converts.
4. Assuming you get an influx of married candidates into the seminaries, that would reduce or at the very least dilute the unhealthy element/walking wounded in the current priesthood. Your average ordinary would have less cause to tolerate the antics/criminality of the bad shepherds.
5. If you are going to take the plunge, strictly adhere to the composite tradition of the Catholic Church in the matter. This means that, as to priests who were laicized, then got married--sorry, no can do. You would lose the services of some worthy orthodox men, but there's nothing to justify this radical break with Tradition. Perhaps they could function as deacons (after exacting scrutiny). In no event should men associated with the professionally aggrieved (e.g., CORPUS, Rent-A-Priest) be considered for any such office.
I.e., in an ideal world, the Wertins, Pflegers and [Insert Name of Renegade Here] would quickly find themselves rearranging the paperwork for annulment tribunals. There would certainly be far less excuse for not removing them ("But they're providing the Sacraments--sorta" would have to be retired).
On the other hand, the arguments in favor of celibacy can't be easily discounted.
1. It is of ancient provenance--the oft-heard argument that it's a 12th Century innovation will not hold water. It is decidedly more ancient than that, even if it became officially binding for the Latin Church in the 12th Century.
2. In the West, until the middle of the 20th Century, it worked: there was no vocations crisis. For the Church in the developing world, there is still no crisis (with the partial exception of Latin America). Even in the West, there are areas still producing boatloads of celibate vocations--consider diocese like Lincoln, Peoria, Denver, Atlanta, perhaps now even Chicago (15 ordained in 2003).
Then there are the religious orders which are packed to bursting, like the FSSP and the Franciscan Friars of the Renewal.
Before making celibacy "optional", a thorough investigation of why some orders/diocese are--and others aren't--generating vocations should be undertaken. It would be interesting, to say the least--and probably would cause a good deal of squirming in certain American locales. That alone would make the process worthwhile to me.
3. The costs of a married priesthood in terms of its vocational and pastoral identity should not be discounted, either. Fr. Joseph Wilson objectively weighs the "cons" in this article. The priesthood would be a vastly different animal under these circumstances. Given the demands of the job, I think Fr. Wilson is right to warn about the inevitability of divorced priests. I know children of Protestant ministers. It's a demanding life, tough on even the best of marriages and strongest of families.
Under this same topic belongs the recognition that making celibacy "optional" will make it marginal. After all, celibacy is effectively "optional" in most Protestant churches (ECUSA excepted, where it has been essentially prohibited by the VGeR saturnalia), but you'll never run across a celibate pastor. Why? Frankly, because it's weird and a little suspect. Only among Catholics (and to a somewhat lesser extent the Orthodox) is the celibate witness preserved.
4. The monetary costs. Even assuming a preference for mature married men with fewer or no dependents, no married man can afford to live on the chicken feed currently paid to diocesan priests. Such men would likely come to the priesthood with pre-existing financial burdens that aren't going to be addressed by $20,000 a year. No matter how many coupons you clip or how much you buy in bulk, a family can't survive on that.
Unless you somehow find the prospect of a Catholic priest and his family living on government assistance to be an inspiring witness (assuming they could qualify).
On the other hand, I think the laity would be more likely to pony up for the expenses involving having such a priest--there would be a sense of "ownership" (for lack of a better word) in "their" guy that is generally lacking otherwise when the plate comes a-callin'. They'd certainly have to.
5. One can't assume that married priests would necessarily be "Profiles in Ecclesial Courage" where celibates are not. An unscrupulous (hypothetically, of course) bishop determined to suppress any kind of scandal would find more "pressure points" on a married father than with a celibate. If a large part of the problem is clerical culture, then dumping married men into that vortex changes nothing.
With all of that in mind, I still think celibacy is the way to go with the priesthood. The fact it's not "working" in large sections of the West doesn't mean it's a failure everywhere, nor does it mean that it can't "work" again. We aren't to the point of radical surgery yet, especially with a time-honored tradition and valuable biblical witness to the world.