In Team Fortress 2 as the spy, when you change to your Disguise Kit, you are presented with an option to change the team you are disguised as. Why would you ever want to disguise yourself as someone from your own team? Doesn’t that defeat the purpose of the disguise kit?
Friendly disguises are mainly used to hide from the enemy that there are Spies in your team, as well as to fool an enemy into thinking your team employs a certain class when in reality it does not. There’s little more utility for friendly disguises than that, but they’re very handy during setup time when the enemy can see you through the setup gates, as well as when you’re among your teammates. There’s more of this in the community Spy strategy wiki article.
Remember that since you’re disguising as your own team, the opposing team will see you as an enemy player (whichever class you’re disguised as) and act accordingly, and enemy Sentry Guns will target you as well. When you’re about to infiltrate into enemy lines, use your cloak and/or switch to an enemy disguise.
Any of the cloaking devices works well; in fact, if you use the Dead Ringer with a friendly disguise, you will drop a fake corpse of the class you’re disguised as. If you were disguised as an enemy, you would drop a fake Spy corpse, which often sends a stronger signal to opposing players of a possible DR Spy.