EDIT: This was supposed to be posted by DMBillies... we had a little mix up in the sign-on procedure.
I've read a number of books about this issue and it has come up time and again here on reef central. I don't consider myself an expert on this, but here's my understanding.
Let's start at the beginning...bare bottom has the advantage of allowing you to easily clean up any detritus sitting around. Some people, including me, have to have a sand bed just because of the look. The deep sand bed is supposed to be able to support a healthy amount of life that will help to turn the bed, keep it free of detritus, and provide low oxygen zones that will support the kind of bacteria that gets rid of nitrates. It takes a little time for everything to get really growing and doing what it's supposed to, especially if you have fish or inverts that eat the critters living in the sand (e.g., sand sifting gobies). The theory is that if you want your sand bed to support such life and have the benefits listed above, you need to go deep (>4"). If you just want the sand so that it doesn't look like a bare bottom, then go pretty shallow. From everything I've read, the reason that you shouldn't go somewhere in the middle is because there's a biological "no man's land" between about 1-4" in which you'll get all of the drawbacks of having a sand bed without the benefits.
I'm not going to argue about what you should go with because there are so many opinions out there... I've always gone deep but that is mostly by default (I have to have sand, I tried the deeper bed, and I've never really had a problem with them). The only issue I've ever had was when I disturbed a bed to move it to another tank... that created an algae bloom that took quite a bit of time to get under control.
