[eluser]farinspace[/eluser]
I think keeping the HTML separate from the logic (business logic) based code is ideal, meaning you wouldn't want a function that gets data from a DB and at the same time write out HTML.
Functions that return objects and arrays are always much more useful, because you can then reuse those same functions for different things/views.
When it comes to PHP in views, I'm flexible, I usually use structural and formatting functions in the views (foreach, while, nl2br, etc) ... it's sometimes just easier to use PHP in your views, but I try to keep the PHP really plain vanilla, no heavy logic.
However, functions that return HTML, I think are fine too, consider this ... your functions in your helper can load view files and return them. Again you keep logic away from the HTML views/templates.
Also consider using "includes" with PHP, if you find yourself using a section of code more than once, put it into an include and use it in multiple locations.
Also take a look the the CI template parser, might be of interest/use ...
