Obviously, the Skultaker is an absolute terror in melee combat. The Killing Blow rule gives him the ability to easily finish enemy characters or mosters. The Skulltaker also has Hatred towards all enemies (including other forces of Chaos) so he gets an extra attack. Throw that in with the Flaming Attacks and he can cause fear. He has a Toughness of 4, but only 2 Wounds. In single combat he should never lose however you should watch out for large groups of enemies. He could kill the baddest Orc around, but a mob of 20 Orc Boyz will probably kill him.
Also, avoid enemy war machines. Given the Skulltakers awesome potential every gun, cannon, bolt thrower, and wizard will be taken shots at him. Leave him in the open for too long and he'll get a cannon ball down his throat.