The main reason to have a karma system, IMO, is to make discussions more readable by ordering comments by quality. This seems to work very well. Providing feedback to commenters is another important reason. But keeping a record of everyone's accumulated karma isn't necessary for either of those functions, and that feature could possibly be gotten rid of entirely.
"Readable" is the wrong word here -- especially since the resulting distortion of the chronological ordering often makes discussions less readable. The actual intended object of maximization is not readability but rather impressiveness (showing off how "good" LW's comments are to new readers), or something like that (see here ).
I disapprove of this, and think the purposes of karma are/should be these two: (1) to make trolls invisible; (2) to reward the authors of high-quality comments, thereby incentivizing the latter.
People who go back and downvote every post or comment a Less Wrong user has ever made, please, stop doing that. It's a clever way to pull information cascades in your direction but it is clearly an abuse of the content filtering system. It's also highly dishonorable. If you truly must use such tactics then downvoting a few of your enemy's top level posts is much less evil; your enemy loses the karma and takes the hint without your severely biasing the public perception of Less Wrong's discourse.
(I just lost over 200 karma in a few minutes and that'll probably continue for awhile. This happens to me every few weeks. Edit: I mean it's been happening every few weeks for a few months for a total of only three or four. Between 400 and 700 karma lost total I think? I don't mean to overstate the problem.)