A good rule to keep in mind is that points rarely appreciate in value, but frequently depreciate.
As to when to use them, though, you're right that it's a lot of personal preference.
-Some people prefer to use points on aspirational redemptions --luxury hotels and business class that they would never pay for out of pocket
- Some people use points whenever doing so would exceed a certain monetary value. (A lot of blogs/sites have estimates of how much they value certain currencies).
- Sometimes people want to bank up a large amount of points for a specific redemption, so it makes sense to wait.
- Finally, a lot of times it makes sense to use points when the cash options are particularly high in a given route/location

I find myself engaging in a mix. My Delta miles, for example, I tend to use whenever I can get a value of more than 1 cpm. My United, Aeroplan, Amex, and Chase points, I save up for long-haul business class travel. For hotels, I have been trying to burn Marriott points whenever I can get value of more than .7 cents per point because I have had so many bad experiences with Marriott of late that I want to be done with them. I'm basically burning Radisson points whenever there is a chance because the program has gotten complicated and not worth the time.