This item actually does have a use!

You've met the guard dogs right? They are annoying as they can't be stealth killed and they detect you and raise the alarm one way or the other before you can get close anyway (most of the time), but if you throw a Paralysis Cake in front of them they will eat it, roll over and die, peacefully!

When an enemy sees you, you have about 1 second before he reacts (goes into alert mode) use this opportunity to kill him, useful when killing enemies around corners or when running up behind them. This works even if the enemy is facing you. Better then rolling around on the floor like an idiot.