They are absolutely ideal in a fry tank. Not only are they "fry safe" but the surface of the sponge gets a good colony of rotifers and other little animals on it which supplement the fry's food, you'll often see the fry congregate around the sponge picking off the tidbits.
Very easy to use, if you're going to set up a fry tank or hospital tank, a couple of well matured sponges running in another tank gives you an easily transportable almost instantly cycled target tank. Too bulky for tanks of any size, need to use several or multi sponge units.