I recently posed this question to my friendly iBook healer.

He says that when you first get a new battery, you should power it up fully then unplug it and let it power down nearly all the way to kind of break the battery in. After that, he keeps his iBook plugged in all the time unless he has to take it to a place where he can't find a plug.

He also recommended that I keep my computer on all the time. This is convenient, but also better for the machine because turning it on and off it stressful for the organization of the directories (whatever that means). Also, leaving it on allows the computer to repair itself automatically by running all the nice little programs it has on OSX. I guess sleep mode for my iBook is kinda like sleep mode for us humans. While she sleeps, she reorganizes her little mind.

While you may be able to extend the capacity and longevity of your battery slightly, lithium ion polymer battery technology was designed specifically to resist the memory issues that plagued older battery technologies. So I choose to take advantage of that convenience.

Also, though it is good to leave your computer on (especially during the wee hours of the night when automatic maintenance routines run) you may eventually experience a bit of a slow-down, due to memory fragmentation (which a restart will resolve).

If you really want to keep your system in ship-shape, I'd recommend running the disk utility and 'repairing permissions' on your boot drive every couple of weeks too.