I use to watch items but usually bid on the last day. Due to the time difference between Spain and the US, I don't like to wake up at night to place my bids. I bid the last day and place a honest bid. If I win, good, and if not, I'll wait for another opportunity.
The counter for the number of watchers helps me to place my bid. If the article has been seen by, say, 80 people, by pure statistics I can think there would be at least 10 genuine interested bidders, so if I want it badly I better be ready to bid high. If it has been watches by only 8 or 10 people, then I have many chances to be the only bidder. I don't bid too high even in those cases to avoid being scammed by self-bids -or bids placed by the seller's friends-.
As a seller, I usually leave the watchers counter. I don't mind if a potential buyer realize there has only been five watchers. I usually don't sell collector items, just things I want to get rid of. To avoid selling by a ridiculous price, I set a honest starting price in such a way that if there is only one bidder somebody can get something cheap and I make enough money to justify the annoyance of making pictures, writing descriptions, packing things, traveling to the Post Office and paying the fees. Most of the things I've sold have had only one bid, but I'm OK with that. In a couple of occasions there has been a bidding war to my advantage, but I don't look for it. If it happens, good for me. I don't think that setting a 99cent starting price will encourage more bidders. For me it makes no difference to buy something for 1 or 5 bucks; I won't stay late at night to save four bucks. I don't think either that anybody with a few eBay transactions will believe he can win a watch, camera or motorcycle auction at the starting price of one dollar.
Raul