I don't think it's bad as long as the rest of your fingers aren't hitting other strings. I used to play like that and just recently switched to playing with straighter fingers on my picking hand. I've seen people play both ways though so I don't think it's a problem.
Well that's how Marty Friedman has always played and it's never stopped him from being an incredible guitarist. So I would say if it feels natural and doesn't interfere with anything it's fine.
if your hand doesn't curl up like that normally, you're probably curling up due to tension, which is not good. in Marty Friedman's case, that's his default position, so unless you normally pick like that as well, it's not such a great comparison.
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Thanks guys. I've always played with my hand like that and it just feels right.