The choice of he, she or it depends on your level of affection towards the animal in question.
You'd refer to your own pet as 'he' or 'she' depending on gender, and you'd also refer to your friend's or neighbour's cat in the same way. Otherwise they'd be offended (the friend or neighbour that is, not the cat. I shouldn't think that the cat would mind either way).
Saying 'it' shows as lack of affection towards the animal. So if there's a horrible cat that you hate, because it's always leaving smelly messes in your garden, then that would be a situation to say 'it'.
It all depends on your attitude!