If a planet is close enough to its star, tidal effects can cause unusual things to happen: The rotation rate of the planet becomes fixed to a particular value, the planet's spin axis is perpendicular to its orbit (no seasons!), and the planet can be deformed such that energy is pumped into its interior. Analogous processes occur on Jupiter's satellite Io, which has so much tidal energy deposited inside it that it's the most volcanic body in the Solar System! If exoplanets are heated to this level, they probably aren't habitable (at least not in the way we understand it).
On the other hand, some heat is a good thing. On Earth, we have some volcanism, and it doesn't seem to reduce its habitability. In fact, the plate tectonics that lead to terrestrial volcanism probably helps habitability because it helps keep carbon dioxide from building in the atmosphere. Carbon dioxide is a greenhouse gas and without plate tectonics (which requires internal heat), the Earth would probably turn into a Venus-like world (also bad for habitability).
Thus, in order to be habitable, a planet should have less heating than Io, but enough to drive plate tectonics. These ideas led my colleagues and I to propose a "tidal habitable zone" around low mass stars (Barnes et al. 2009b). The figure below shows how this tidal habitable zone compares to the zone based on starlight.
Last Update: 31 Aug 2009