Lithium batteries will degrade if left in a low charge state. To get the capacity/run time out of a battery cell, manufacturers will let you push the device deep into the discharge state. But this comes at a cost of decreased lifetime.
Since lithium cells have no memory like NiCd, it's best to charge them promptly. Although long term storage of a lithium cell at full charge isn't healthy either, but not as quickly degrading as discharged state.
For longest life of a cell, discharging to 20% capacity and charging to 80% is generally preferred.
As I understood it, working on laptops with NiMH batteries, NiMH does have some memory effect, but not nearly as bad as NiCad, but it was beneficial to fully discharge them from time to time.
As I understand it, lithium based batteries have a very flat voltage curve between about 80% and 20% charge. Anything in between is strictly an estimate based on measured current flow. Occasionally cycling to below 20% recalibrates the system that reports battery percentage, since the total amount you can draw on a charge will decline over time.
Generally lithium batteries should be stored long-term at about 40-50% charge. Some laptops, if they recognize you almost never use them on battery will prompt you to set the computer to maintain them at about 50% charge, to maximize the life of the chemistry.
I have a Treo 650p and I can still use it, because I discharged the battery to 40% before removing it for storage.