Award use for me is divided into two primary categories: Cost/Benefit, and Sheer Indulgence.

Cost/Benefit is similar to what most others have posted. If you can fly somewhere and earn a reasonable number of miles for under US$300 within NAmerica, US$400 to Europe, and US$600 to Asia [before taxes and fees], then I pay for the ticket and hope to be able to use upgrades.

Also, if there is not sufficient notice for a must-go trip to purchase a discounted fare, then miles become an option because NAmerican travel to easily top up to US$1500 or more for a full fare Y ticket, elsewhere even more. [And award tickets are almost as flexible for me as a full Y, J or F fare ticket.] Being top tier in AC, I have access to any seat still for sale on the flight I want, even if no award inventory exists, for the normal award price. This is an extremely valuable benefit.

And AC also offers short-haul NAmerican awards for 15K. While expensive to some, these are also quite useful for mileage runs, when the objective if to top up one's status miles. Since fares are too expensive ex-Canada, I will use a short haul award to link up with a mileage run on UA or AA. The MR flights will generally earn 15K to 20K status miles, and twice that many due to elite bonuses. So I will net out what is spent for the award, and still be ahead on each balance: status and general account.

However, for the most part, I will still use awards for Sheer Indulgence: to fly First Class to Asia, Africa or Australia, where sleeper bed seats come into their own. 120K or so miles for the equivilent of a US$10K First Class ticket is a pretty good use of one's miles.

Of course, these strategies can best be managed by those of us who hold elite status in one or more programs, and who have been at it long enough to have account balances that would make us very wealthy people were they dollars instead of miles!