Historically, there has been some debate over the use of /127 prefixes for IPv6 interfaces. Section 3 of RFC 3627 explains how an interface addressed out of a /127 prefix can potentially interfere with IPv6's subnet-router anycast mechanism (as defined in RFC 4291 section 2.6.1):
Using /127 can be especially harmful on a point-to-point link when Subnet-router anycast address is implemented. Consider the following sequence of events:
Router A and Router B are connected by a point-to-point link.
Neither has anything configured or set up on this link.
3ffe:ffff::1/127 address is added to Router A; now it performs Duplicate Address Detection (DAD) [NDISC] for 3ffe:ffff::1. Router A also adds the Subnet-router anycast address 3ffe:ffff::0/127. (DAD is not performed for anycast addresses.)
Now Router B has been planned and configured to use 3ffe:ffff::0/127 as its unicast IPv6 address, but adding it will fail DAD, and Router B does not have any address.
Similar scenarios also happen during router reboots, crashes and such.
The RFC goes on to suggest several solutions to this predicament (foremost of which is to simply use /64 or at most /126 prefix lengths).
On the other side of this argument is a budding Internet draft which defends the use of /127 prefixes on inter-router links, primarily for security reasons (see section 5):
RFC 3627 discourages the use of 127-bit prefix lengths due to conflicts with the Subnet-Router anycast addresses. However, the RFC also states that the utility of Subnet-Router Anycast for point-to-point links is questionable.
RFC 5375 also says the usage of 127-bit prefix lengths is not valid and should be strongly discouraged, but the stated reason for doing this is to be in compliance with RFC 3627.
Given that Subnet-Router Anycast is not currently widely implemented, an alternative solution to this problem could have been to recommend that Subnet-Router Anycast be disabled on prefixes that are 127 bits long.
A quick test confirms that the subnet router anycast address is not implemented on recent IOSes, though attempting to assign the address within a /64 invokes a warning:
R1(config-if)# ipv6 address 2001:db8::/64 %FastEthernet0/0: Warning: 2001:DB8::/64 is a Subnet Router Anycast
Assigning such an address with a /127 mask, however, does not invoke the warning, indicating at least some level of logic with regard to /127 prefixes. This behavior is likely to differ among manufacturers, and possibly among software releases.