WCF's data objects should ideally be light-weight data transfer objects only. I would only re-use WCF's data objects if:

 - My Models are always going to be simple POCO objects. No validation, no business logic, no property change notification, etc
 - I don't care that the entire class as visible and fully accessible to whoever used it (You can't have read-only properties in a WCF data model)
 - My View does not bind directly to the Model, and instead binds to ViewModel properties which expose Model properties. This is the "MVVM-purist" approach, however if it often more trouble to implement than it is worth, so binding your View to your Model is also acceptable

That being said, I have never actually used WCF data objects as my Models. Usually I create Model objects separately, and my client-side data access layer converts the WCF data objects into Models for my application to use. 

I usually use something [Automapper][1] for this, which will automatically map data from one class to another, providing the names and types are the same.


  [1]: http://automapper.codeplex.com/