The PL/SQL package dbms_xmlgen has been around for a while now, but it sort of suffers from a lack of doc and examples. Getting it to handle namespaces properly is a good example - it seems like it should be a bit more intelligent than it actually is!

Let's say we wanted to generate this:
<?xml version="1.0"?><a:gadgets xmlns:a="uri:a" xmlns:b="uri:b" >  <b:phones/></a:gadgets>

Part of the solution would look like this (enough to illustrate some key points):
...V_CURRENT_EL := DBMS_XMLDOM.CREATEELEMENT(doc => V_DOMDOCUMENT, tagName => 'gadgets', ns => 'uri:a');DBMS_XMLDOM.SETATTRIBUTE(elem => V_CURRENT_EL, name => 'xmlns:a', newvalue => 'uri:a');DBMS_XMLDOM.SETATTRIBUTE(elem => V_CURRENT_EL, name => 'xmlns:b', newvalue => 'uri:b');V_CURRENT_CHILD_NODE := DBMS_XMLDOM.makeNode(V_CURRENT_EL);DBMS_XMLDOM.SETPREFIX(n => V_CURRENT_CHILD_NODE, prefix => 'a');V_CURRENT_NODE := DBMS_XMLDOM.APPENDCHILD(n => V_CURRENT_NODE, newChild => V_CURRENT_CHILD_NODE);...
Here are the few guidelines I've "inferred" about DBMS_XMLDOM behaviour (note that this is all my reverse-engineered understanding, so I may be well off base!):

1. namespaceURI/ns params of createDocument, createElement methods just declare the namespace of the entity and have no practical impact on the generated xml

So the xml output would be the same even if you changed line 1 of the code above to:
V_CURRENT_EL := DBMS_XMLDOM.CREATEELEMENT(doc => V_DOMDOCUMENT, tagName => 'gadgets', ns => 'someotheruri');
NB: you can verify the namespace is internally altered using DBMS_XMLDOM.GETNAMESPACE

2. to set the xmlns attributes of the document, you need to explicitly create the attribute. You need lines 3 and 4 of the code above.

3. to cause a node or attribute to be serialised with a namespace prefix, you need to explicitly request it with the SETPREFIX call e.g.
DBMS_XMLDOM.SETPREFIX(n => V_CURRENT_CHILD_NODE, prefix => 'a');

4. however, the namespace prefix will only be used in the serialised xml if you also set a namespaceURI/ns (from point 1).

5. there is no validation or verification that the namespace prefix you set (point 3) matches a namespace you have declared (points 1 and 2).

As you can see, DBMS_XMLDOM is really just a very thin wraper to programmatically generate XML at the lowest level. It leaves much of the "intelligence" for you to provide!

Bearing that in mind, you probably can think of many cases where using DBMS_XMLDOM is not the right answer, but is sort of brute force/naive.

If you have data in Oracle and want to produce some complex XML output, there are many smarter alternatives, such as defining an xmltype view over the source data and then doing an xsl transform into the desired document format. Aside from being much less tiresome than DBMS_XMLDOM, it has the benefit of separating presentation (the template) from the data. When you need to change the output format, you just change the template rather than hacking away at the DBMS_XMLDOM code.