For leveling, I would indeed recommend to go Feral, no downtime, you kill fast and have very high survivability.

For PvE, dreamstate is really not that good for healing except at high end level(like orangbulu said). I had one of my guildmate who managed to heal "Ok" in normal 5 man with T4/T5 gear but it was kinda hard sometimes due to DS mechanism. Doable for the "lulz" but not really viable. normal resto will much more efficiet.

For PvP, I am not sure since I do not pvp in Wow but I heard some good stuff about DS droods in the lower brackets.