I have a website and application which use a significant number of connections. It normally has about 3,000 connections statically open, and can receive anywhere from 5,000 to 50,000 connection attempts in a few seconds time frame.
I have had the problem of running out of local ports to open new connections due to TIME_WAIT status sockets. Even with tcp_fin_timeout set to a low value (1-5), this seemed to just be causing too much overhead/slowdown, and it would still occasionally be unable to open a new socket.
I've looked at tcp_tw_reuse and tcp_tw_recycle, but I am not sure which of these would be the preferred choice, or if using both of them is an option.
According to Linux documentation, you should use the TCP_TW_REUSE flag to allow reusing sockets in TIME_WAIT state for new connections.
It seems to be a good option when dealing with a web server that have to handle many short TCP connections left in a TIME_WAIT state.
As described here, The TCP_TW_RECYCLE could cause some problems when using load balancers...
EDIT (to add some warnings ;) ):
as mentionned in comment by @raittes, the "problems when using load balancers" is about public-facing servers. When recycle is enabled, the server can't distinguish new incoming connections from different clients behind the same NAT device.