In a recent discussion about roleplaying mechanics I heard an opinion mentioning that character flaws should be a disadvantage and therefore rewarding well for playing them isn't something that should be done. My way of looking at flaws is completely opposite. While flaws are in general supposed to be a tool of balancing (or in practice min-maxing) characters, they work best as a tool to bring atmosphere, good story and drama to a game. And for this purpose, they work best if players want their flaws to cause them problems.
I've mentioned before that in my Savage Worlds cyberpunk game I give my players full benefits that are normally given for taking 1 major hindrance and 2 minor ones. They can freely choose as many or as few flaws they want, although 1+2 feels a good amount to aim for. When using flaws this way, you should also explain to your players that taking no flaws or just ones that feel riskless result in way less bennies than other players get, a boring character and potentially a boring game. Boring games leads to, well, boredom and not having fun, and potentially less xp.
Note: From now on, I'm going to talk about flaws, whatever term a game uses about it's negative aspects of characters. It's an unified term, short and easy. I'm using Savage Worlds for examples but the principles can be used for other games too.
Shared responsibility and flaws as a way forward
A good general guideline for rewarding for playing flaws is that when a player (or group) gets in trouble or is otherwise hindered because of roleplaying, it is worth rewarding - to a certain point. Spamming same flaw all the time is usually boring (it may be fun sometimes if the player has good sense for this kind of things!) and trying to steal spotlight because of a flaw too often or in a way that feels forced may become even punishable if the player doesn't get gm's hints about it. Common sense is your best tool for appraising when to reward and when not. And some created scenes should perhaps be fast-forwarded so that they don't slow down the game too much - much like some Prequel Star Wars scenes where Anakin ignites his lightsaber and the scene is cut.
When a player gets a benny for getting in trouble, he will be getting in trouble; even min-maxers will realize values of this, as it lets them shine even more when doing something they do well.
By making flaws into a positive thing we encourage players using them themselves. If you as a GM are not sure you remember to reward your players, you can also ask them to remind you if they think they should be rewarded. It is also good to have your pc's flaws on a paper in front of you all the time as a reminder. Sometimes when you need a way to get forward with the story, you can always decide to invoke a pc's flaw and introduce the way forward via it. For example, a greedy character with tendency of robbing people may see a rich-looking guy who is very drunk and robbing him is a piece of cake, but when checking out the loot it turns out that the man is actually connected to the main plot and there's a note leading forward in his purse.
GM may just invoke (or even force) flaws from time to time. One thing that apparently works well is holding up a benny (=Savage worlds resource point) and looking at a player when opportunity to play a flaw comes up (Suggested by TheLoremaster at Savage Worlds forums). I'm trying it the next time, even if my players have taken the hint even without showing the benny.
Idea of turning flaws into resource may need some tweaking. For example, in Savage Worlds hindrance Unlucky needs to be changed into trouble magnet. It's easy to make a major version of this flaw too, just more and worse things happens to you.
I hope this post has helped you to look at the flaws in a new way if you have thought of them as just a way to balance characters. You may also have good roleplayers as your players, which reduces importance of this point of view, but rewarding well for playing flaws may remove the last inhibitions these players have about roleplaying and may lead for even more extreme experiences.
One more benefit from positive flaws is that players may take flaws that aren't in the rules; it's easy to improvise a flaw when player is willing to make it become meaningful! And remember that players playing their hindrances well can be great fun for GM as well as players! GM gets usually less surprises in games than his players, so this is usually very welcome feature.
Edit: Changed the title, term 'Necessary evil' was misleading as this post has nothing to do with the setting - it was used to describe flaws as something you need to take even if you don't want them.