I do like the auction format for items that are potentially popular enough to generate some bidding, of course, and when I'm doing a lot of listing, I throw in a few auctions just to see what might happen on items that I bought at a super-low price.
Sometimes I'm just fine with a tiny return on a tiny investment, and for me, part of the fun of eBay is helping someone score a nice deal on an item they'll really enjoy. For example, I got this boy's necktie for next to nothing at the Goodwill Outlet and was happy to find someone who would enjoy it (I like to imagine a kid wearing it for a school photo, ha!).
When it comes to doing fixed price listings, one of the main questions is: should you allow buyers to submit best offers? For the most part, I like to allow best offers because I think buyers enjoy the freedom of making an offer and the idea of feeling like they're saving some money. As a buyer, it's kind of like the thrill of using a coupon when you make an offer on an item and the seller accepts it--you just saved money!
I'm finding that many sellers factor in the potential best offer when determining the price for a fixed listing by "going high" and considering offers as they come in. For most items where I'm open to best offers, I set the price a little higher than I'm willing to accept for the final sale; with an item that seems very rare to me, I'll set the price a bit higher than that.
I know that some sellers use a feature on eBay which allows for automatic decline of best offers below a certain price point, and while I haven't used this myself (in part because I don't have the volume of listings where I'm getting a zillion offers to review), I can understand why you'd want to use it. Sometimes buyers make really, really low offers; I wouldn't even call these "best" offers. It can be a little irritating to have someone offer $3 for something that you know is worth $20, but it's easy enough to decline the offer. This page from eBay explains how best offers work and how you can set up automated accept/decline features for an item where you're using best offer.
When I first started doing fixed price listings, I would always allow for best offers because as a buyer myself I enjoy them, but recently I've eliminated best offers on a few listings where I have a specific price in mind for the item. For example, I found an unopened USB hub at a garage sale, and this is an item which generally goes for around $10, so I've priced it accordingly and just let it be.
As with everything on eBay, it's a learning process, and it can be fun to experiment with different ideas on different listings and make adjustments as you go.