The Sandbag is a starting unit that remains valuable throughout the game. When you're starting out and don't have any armored units, sandbags can prevent heavy casualties from tanks and projectile-firing enemies. They are not well-suited to protection from melee attacks. If your team is simply steamrolling the opposition, there is little reason to launch a sandbag at all.
Timing the use of the sandbag properly is critical in dangerous situations. The sandbag carrier will run away if he comes too close to an enemy or takes fire. If you call him out when your forces are already encountering heavy resistance, make sure you tap him to make him drop the sandbag before he reaches the front of the chokepoint.