I'm not the kind of guy who plays moderator; I think the worst action I've ever taken against anyone on SO is a downvote. I prefer to ignore instead of flag, but I'd rather flood the moderators with a ton of spam flags than see my favorite tech resource devolve into Y!Answers.
Moderators have a tough enough life as it is without excessive flagging, but after searching for meta, I couldn't find any guidelines on what should or should not be flagged. Are there any? Are there repercussions to incorrectly flagging? I'm sure this is in the ToS, but I couldn't find that either. :P