I posted this on the iPod Lounge Forums:

To build my smartplaylists, I use ratings and comments.

My ratings:

5=love the song
4=good song
3=ok song (don’t hate it)
2=hate the song and don’t want to hear it again
1=flag this song for editing

Things I put in the comments field:

Sleepy
Soft
Smooth
Japanese (I use this because I have tons of J-music, and a Jpop genre is not flexible enough)
Fun

Comments are fun to build playlists with, since they can be anything. The only problem is that it takes more effort to actually tag the song with the comment. That is where my Songs 2 Fix playlist comes in handy (see below)