I like ratings but I don't live or die by them. When I'm just looking at entries in MM, I'll give ratings to the songs I remember well, which usually means four-to-five stars (or two, if the song is memorably lame).
When I'm listening, I'll periodically bring up the MM window and look at what's unrated in the songs recently played. Some of them remain unrated, because I haven't heard the song enough to have settled on an opinion, or I wasn't paying enough attention while listening. Otherwise, if I remember hearing it but no more than that, and it wasn't annoying, it gets three stars; if it had a decent hook or other memorable feature, it'll get 3.5.
4.0, 4.5, 5.0 are the cream, and it's a bit of a die-throw exactly which rating a really good song gets. 2.5 songs are weak or have some problem (run on too long, or someone singing off-key on an otherwise good song); 2.0 and less are not good. The 0-to-1.5 range is unnecessary but some stinkers get those ratings anyway. 98% of the music in my library consists of ripped albums, and I don't delete tracks just because I don't like them. Sometimes you need to play a bad one for a friend just to demonstrate how bad the song is.
The ratings do change; often they'll get nudged by a half-star in one direction or other. Ratings are set in context of the artist; nothing Amy Winehouse has done is as good as the best of Björk, but a couple of Amy's songs still get four stars because they're fun and good to listen to.
Interestingly, songs on last.fm that I "love" aren't all five stars, and not all my five-star songs are "loved." Even on a given album by a favorite artist, I might "love" a four-star track but not a five-star one. I think this because the rating includes technical considerations, but on last.fm the "love" goes to songs with an emotional punch.
Songs with less than three stars get excluded from AutoDJ and mix-lists for the portable, but I also have a playlist called "nomix" which gets songs that I don't want to pop up randomly, such as ones I prefer to hear in album sequence.