I have heard it has been associated with bad outcomes in young children, yes. I certainly wouldn't give it to a young baby for that reason, unless there was serious medical need. I'm surprised a doctor would suggest it for a baby simply to sleep, especially since not sleeping is pretty normal and healthy baby behaviour.
I tend to agree. When we did a long haul flight awhile back I had everyone from my colleagues to my real estate agent telling me to get it for the flight. I googled it and came across a lot of information against it's use, including class actions related to horrible outcomes in babies, so decided against it. I did however get some Brauers calm drops which are homeopathic and they worked really well.

Phernergen is an anti hystamein (sp?) and meant to treat allergies. So personally, I would only use it for it's intended use iykim?