It doesn't work for me generally, I'm level 52 in hard mode and I think I've only had one kill with it.
I get some hits but not enough for a kill, then time returns to normal speed and before I can find my aim the guy has moved or gone behind cover. V.A.T.S only seems to break the flow of combat for me and appears to require a massive investment of perk points to be worthwhile.
What am I doing wrong?