I've ever seen many people talk about use link cloaking or try some tiny url for any links in your site. But do we need to use them in destination url when we use PPC like adwords?
No, you don't need to cloak your destination URL, because it will never be seen - not even if people hover over your ad.
Unlike Yahoo and MSN, the underlying link of a Google Ad can be discovered - just right-click and copy link, it is at the end.