It will still work, however its life will be shortened.

A nice slow charge will help.

Sent from my Nexus S 4G using Tapatalk

Having just puffed a pack on the second flight, (and I'm currently in  talks with hobbyking about it), you'd be wise to take a closer look at the pack. If it's puffed it's more than likely weakened the cell. While this might be alright for low amp setups, if you're running a relatively high amp setup (say upwards of 15c) then it could cause problems.

The pack that I puffed would balance charge fine, but in a short period under load, the puffed cell would drop voltage pretty quickly. Ultimately that means that you won't get the desired capacity from the pack before that cell is overdischarged, and overdischarged packs puff!

If you're like me, and can't stand the thought of using your beautiful E ship for testing suspect packs, do some testing on the bench, (with a fire extinguisher handy) and see what happens to the pack under load.

I put my 5800mah pack under a 30 amp load (around 6c) and within 5 minutes, and 2250mah out the puffed cell had dropped to 3.55v. I'm sure that if I tried to get 4500mah out of that pack it would have seriously damaged the puffed cell (moreso)

This is from LithiPedia regarding pluffy batteries.

There are two types of swelling we typically see.  Soft swelling with internal gas and hard swelling where the battery feels very solid and typically all the cells are very firm.

1 soft swelling - puffing
- the pack is not rated for the performance specified
- the user is over powering the packs capability
- internal fault causing HF gases to form


2. hard swelling
Hard swelling is less dangerous.  This basically means that the pack as run its useful life and lithium cannot move within the structure.  cell phone batteries typically do this at about 500 - 600 cyeles.  RC batteries at usable rates possibly 100 - 200 cycles

Source:  xiaolei fan, battery product manager fullriver battery

Funny this is LithiPedia does not say what to do if you get a puffy battery.  I take no chances, I don't care what the age of the battery is if it becomes puffy it goes directly into a bath of salt water and then the trash.  Batteries are just not that expensive.
andy