A lot of conflicting opinions have been presented regarding the safety of Teflon and other nonstick coatings over the years, with the manufacturers (of course) claiming their materials are safe, with others claiming the exact opposite.
The problem generally arises at higher temperatures. PTFE begins breaking down around 500° F (260° C), and can release harmful gases, which are lethal to birds, and can cause flu-like symptoms in humans.
This rarely happens when cooking, and most vegetable oils will start smoking at a much lower temperature, but it's not out of the question that an often-used frying pan will start degrading, exposing the white material underneath the familiar black coating, which can potentially cause problems. High heat will bring an empty or almost-empty frying pan up to this temperature rather quickly.
Although the EPA has indicated it does not consider this a concern, the good news is that eco-friendly, Teflon-free nonstick cookware is readily available from a variety of manufacturers, and if you're in the market for new pots and pans, you have plenty of chemical-free options.
Eco-friendly cookware can achieve nonstick properties by using newly developed materials, or going back to tried-and-true methods such as ultra-smooth ceramics. By using these materials they eliminate the use of harmful chemicals, and generally lower the CO2 footprint of manufacturing the products as well. However, many of these products are relatively new, and receive mixed reviews, so be sure to shop around first, especially as the market changes.
Some of the most consistently praised products are the offerings from Ozeri, Scanpan, American Kitchens and Beka.