Track application wise, the basis of gearing selection is to match it with your engine's power/torque band and the track. A technical track with lots of corners, lower average speed with an engine with a 'peaky' [Narrow] powerband would go for shorter ratio and more gears to select from usually at the cost of top end. Visa versa. Very general but gives you an idea.

Now there are problems such as having too short and too many gears meaning more time lost due to the amount of gear shifts made. Too long and/or too little gears [Think like older cars with the traditional 4spd Auto or older Australian/American cars] means that the car relies on its mid range torque to pull it through, troublesome if you don't have a big donk powering you along.

That's all well and good in absolute terms [Racing] but what about street?

It depends on what you personally have, want and can put up with. Shorter the ratio will keep your car on the boil as everyone has alluded yes, if you don't mind shifting more, having a car that's not relaxing to drive, higher rpm doing 100kph on the motorway/freeway therefore more noise etc etc. Factor that in too...