It's useless in melee games because by the time you have teched to Mind Controlling Dark Archons, Arbiters, and have managed to get a Hydralisk capable of burrowing, your opponent most likely has some Overlords and Spore Colonies, otherwise you would have crushed them. It's time consuming to pull off, and burrowing again gets rid of the effect, as does putting it near an Arbiter again. Dark Templar are much more effective.
On a side note, you can use it effectively in a UMS map. Using a trick where you disable a computer owned Zerg unit, enable it, order it to move somewhere, move it physically witha trigger, then give it to a human player, and have them not look at it for a minute (depending on the unit, Mutalisk will crash if you see it cloak, Zergling, Hydralisk, and Lurker won't), then you have a permanently cloaked unit that won't uncloak ever.
Overall, I would be astounded if someone were to use permanetly cloaked Zerg units effectively in a melee game.