I might once every six months - or even longer - typically after something big - like installing W7 SP1, or before moving my music library. If you have lots of free disk space, it does not matter if the files are scattered all over the place, as long as all the related file fragments are grouped together and the [hopefully] Windows managed Page File has its required breathing room.
With 1T, 64Mb buffer, SATA 6Gb/s, 7200RPM drives
for less than $100, I think keeping a couple 100Gb of free disk space is plenty. Less than 30Gb on the boot disk, especially if also where the PF is running is when I think it is time to start deleting programs and files (songs, videos, pictures) you don't need, or buy more space.
Long ago, having all the files jammed into the front of the disk may have helped with performance. But not any more. Not with 13ms access times, 32 and 64mb buffers, not to mention huge amounts RAM that greatly minimizes the need to access the disk repeated. And
not with ALL
the software companies today pushing out updates via the Internet. And note file updates do NOT just replace the old file on the disk. A new file is written to a new location on the disk, verified, then the old location is marked free creating a hole for fragments of other files, or smaller whole files, to fall in.
This writing and verifying before deleting the old file means at some point, both versions are "temporarily" taking up ~ double the disk space - illustrating why lots of extra "free" space is needed.
Of course, the amount of needed free space also depends on how you set up your drive or drives and partitions. I have only Windows and hardware drivers on my small boot disk. The PF is on my SSD and My Documents, Temp files, and all my apps are on D drive. So I only have 25.2Gb free on my boot disk and that's not a problem. I have 700Gb free on my D drive, and of course, fragmentation is not an issue with SSDs. And with 8Gb of RAM, Windows can "prefetch" and "superfetch" almost everything the CPU needs in RAM, so the PF is not very busy.
Windows defragger will analyze your drives and tell you if you need to defrag. I last defragged my C drive in Feb a couple days (to make sure all was okay)after installing Win7 SP1. Even after all Windows Updates since then, I am just 3% fragmented. Why bother? My apps and data drive is just 2%. It will recommend defragging if needed. If you are constantly adding and removing major programs, and don't have lots of free disk space, you may need to defrag more often.
I concede that the 3rd party defraggers do produce a more efficient defragging than Windows own "basic" defragger. I am just saying a "basic" defragger is all we need. And the others, including Defraggler, really just takes up more precious disk space!