Stackoverflow is, I think, a good example of how giving out badges and points helps. The knowledge base they have accumulated is amazing. Nowadays, I find most things I need, without even posting a question.
However, I realized it did have an interesting effect when contributing answers. This happened a couple times to me. I would contribute a long answer with all kinds of details and would get annoyed when the questioner would say a (genuine) thanks without upvoting the answer or marking it as the right answer. I mean, here I am, pissed off about some points that wont effect my life in anyway whatsoever, when I should just be happy, that I was able to help someone out.
I think the ideal evolution of such systems would get us to points where we just feel good that we are helping out, rather than reinforcing some mindless craving for a reward.