without any full scientific basis, I would say never to allow the battery to completely drain.
I noticed that the lower I let a battery drain -- the quicker it loses power on the next full charge. for example, I noticed a somewhat significant difference in battery life from letting it drain only to 50% then charging, then letting it drain to 30% then charging. I noticed that between both at a final full charge, I would lose battery life quicker under the same usage scenario. but this quicker loss of power, can only degrade soo much before it settles into a norm. so if you want your battery life to be a bit above the norm, it's best to charge well before low battery. once you reach that low battery threshold even once, your battery life is forever reduced, to a noticeable degree, I would say as high as a 10% difference (i.e. you'll lose power 10% quicker)
the reason why draining a battery completely became popular is because there is some degradation over time. for example, an iphone 5 after 400 recharges, will only hold 80% of its original capacity. so obviously, you would want to charge as little as possible, hence why people would want to charge only as much as needed. but I doubt many people will be charging their N7 more than 1x a day on average, so you're looking at well over a year before you notice somewhere near a full ~20% reduction in full charge capacity.
I like to think of electricity as water, and the cells as water tanks -- if you empty those tanks, then try to refill them, there may be some 'air bubble' spaces where a charge isn't held so well, or at least as well as before.