Using the word "utilize" when the writer means "use" is an oddity which doesn't annoy me nearly so much as it perplexes me. The two words mean exactly the same thing, without the smallest shade of meaning's difference between them. I'll grant you that "utilize" is a little bit longer and consequently sounds more important. It's also a word of French, rather than Old English, origin, which I guess adds a bit of an advanced, educated sound to it. Even so, it's also ridiculous to use an exact synonym for a common word simply because it's different.
Of course, it's done sometimes simply to try to obscure themeaning of the speaker — the higher the syllable count, the less likely anyone is to listen carefully. Similarly, people will say things like, "at the present moment in time" instead of "now". This is, however, a direct attempt to avoid comprehension, and unlikely to be mistook for anything else.
I've noticed "utilize" in a lot of technical documentation, however. This is especially where I don't understand its use, since there's no advantage to being unintelligible in technical documentation — it means that either people won't use your products or you're going to have to spend more time explaining it to the reader when he calls you on the phone.
Obviously, it's possible that when writing about technical subjects, they just don't feel that common words are appropriate — since computers are so complicated, anything describing them must be equally complicated or it must be wrong. Still, I can't get past the idea that it's actually the result of people not really knowing what they're talking about, and using long words as a more dignified way of saying, "um". There's also G.K. Chesterton's idea that long words are mental labor saving devices, allowing the author to write all day long without ever having to think because he's never actually gotten around to saying something.