I think the best case scenario I have seen with the grade school athletics, is when you have two like minded coaches that rotate the players and emphasize team effort and fundamentsls, and the kids learn respect not only for themselves, but their fellow teammates and opposing team mates. I think we do a disservice to our kids by not keeping score at sporting events, because the earlier in life you learn how to lose or win gracefully, the better off you are, like Wayne says it does translate to other parts of life.
I also have to agree with David, especially in the younger kids, you got to have fun, and you have to learn team play, and when a team with suboptimal talent but better coached, beats a hot shot team, especially if your kids involved, sure makes it fun.