Confession: I hate chapters.
As a reader, I'm indifferent to them - I rarely pay much attention to where the breaks occur or stop at the end of a chapter. Of late, they've only mattered because I've been reading a fiction book and a nonfiction book at the same time and swapping at the chapter breaks.
As a writer, they drive me nuts. I tend to have a general sense of my story's path, but I work without an outline, and I often find complications or expansions develop as I'm writing. Because of this, I may start a chapter and have an idea of where I want it to end, then find as I get within the approximate word count I've chosen for my chapter length ... oh, I'm not anywhere near that cliff-hanger. So I have to create another one, and then what I'd intended to be the end of chapter comes in the middle of the next ...
When I wrote Flow, I had the oh-so-brilliant idea (note the sarcasm) to name the chapters, which meant even more headaches when I found that the event for which I'd planned to name the chapter wasn't going to happen, or wasn't happening quite the way I'd thought, or some character said something that made a better chapter title, so now I've just thought this up for nothing.
Another reason why chapters bug me, I think, is because they exist purely outside of the story. To use a roleplaying term, they are OOC - Out Of Character. Except in the most meta of novels, no character is pointing out that look, here comes a chapter break! Who Wants To Be A Hero? occurs in episodes, so that was a natural way of dividing the narrative. For Journal of the Dead, the third person part of the narrative uses a handful of very short chapters, but once we're into the journal, it is divided up as Rhiane's writing is: by days and when she starts / stops writing.
But chapters seem to be a common enough convention - some agent guidelines, for instance, don't even suggest an alternative writing sample size if you *don't* use chapters - so I fear I may have to contort myself back into them. We shall see.