I think it has been pretty well covered by the other posters - eye protection for everyone on the range (shooters and any spectators), flat steel in pretty good shape, min. distance, etc. A few comments though:
Rob may have meant steel shot, as it is a serious ricochet hazard (I have a story about a shooter at an indoor range with steel shot...) Regular lead birdshot, however, is perfectly fine on steel if the other precautions mentioned are observed. It is used in three gun or multigun matches all the time and is a lot of fun.
Also, steel targets should be shot as close to perpendicular to the shooter as possible in order to break the round up. It can be angled so that it deflects the round down (top of target closer to the shooter than bottom), but any other angle will only deflect a large portion of the splatter likely in a direction it shouldn't be going, and the "flatter" the angle, the bullet is less likely to be broken up and more energy will be retained.
I've seen a whole bullet come back off of a badly caved piece of steel and hit someone. It was part of the base and had been previously hit by a shotgun slug by accident. The shooter missed the target and hit the slug impact point. I would be willing to be the bullet weighed close to 100% of its fired weight, and although it stung the person it hit and probably left a bruise, there was no serious injury thank goodness. I have seen a few small cuts on arms or legs that drew blood, but they are very few and far between. At least one occasion was a shooter that engaged a piece of steel at entirely too close of a distance.
For maximum safety, frangible bullets would be the way to go but they are just too expensive. I tried 1000 some time ago and really liked them, but the price was a lot then and it is over twice what regular jacketed bullets are now. They literally allow shooting steel at nearly contact distance and turn essentially to dust, nothing larger than .1 grain I believe. Very impressive.
For what it is worth, USPSA has gone through a couple amendments to their rules on the minimum distance allowable on steel targets, and the current version of Rule 2.1.3 requires a minimum distance of 23 feet. I'm not saying this is written in stone or that USPSA is always the best resource or even "right", but considering the number of shooters and matches they at least have a lot of experience behind the number and it is a decent place to start. At one point, I believe they required 7 yards minimum. I don't think the additional 2 feet were necessarily added for safety, as 23 feet just happens to be VERY close to 7 meters (7.01), which I believe is the international standard in IPSC. Definitely nothing wrong with adding a yard or two to it for your own safety, so I wouldn't argue with the recommendations for a 10 yard minimum. I've got a little "steel garden" out behind the office and don't shoot it closer than about 8 yards or so and have never had a problem.