So the r.o.t. I have always heard for replacing shifter housing that isn't physically damaged is when the plastic out cover has pulled away from inner cables a significant amount. What I don't know really, is how much "significant" is. Also if the cables are long enough can you just trim the ends off a small amount and reuse?

If you have indexed shifting (STI, ERGO, etc.) it's best to replace the shift housings when replacing the cables. The condition of the housings is just as important to good shifting performance as the cables. Same can be said for brake housings but they seem to last longer than shift cables and housings. Excess friction inside housings will cause sluggish shifting, especially those shifts when the cables are moving away from the shifters and the derailleur springs are pulling the cables through the housings. The short housing found at the rear derailleur is subjected to more dirt and water and are usually the first to go.

When it looks ugly, or stops working, well..

That's pretty much it. Changing housing depends a lot on how and where the bike is used. If it's a good weather road bike, the housing can last for years and several inner cables. If it's a bike used in bad weather and/or off-road, the housing will gum up and need to be replaced a lot more often.

I change my mountain cables and housing once a year, and my road about every 18 months. I can get bulk housing from my LBS for anywhere between $1 - $2 a foot (depends on who is at the register and pocketing the money). I'm also a fan of stainless wire. Sometimes I find it hard to tell when the cable and housing get crappy, since it happens gradually over time. But you'll notice a big difference when you install the new cable and housing - quite a difference.

what is the opinion on changing friction shifter cables? Is it any different? Is it different still if you are using regular flatwound cables as opposed to compressionless (as you could with downtube shifters?)

You don't want problems? Change it with every cable change. I change it with every other cable change. I change it when I have shifting problems. Bike shops change it with every cable change.

Cables are cheap, $3-$4 or so, teflon are $7-$10. However, when I change cables, I'll save the rear cable and use it for the front cable of a relatively unused bike if I need it, sometimes for my road bike in a pinch though the front cable seldom fails.

The old friction shifter cables were steel, not stainless steel, and they always oxidize. This is what I save my older cables for though in many cases, the housing is a different diameter. Friction shifter cables do not need to be replaced as often because they do not need to slide as easily and when they move, they move more.

If the housing moves, I replace it. I don't know how much a move is acceptable. My LBS told me it moves, you change it.

Personally, I have -rarely- had a need to change housing due to peeling, and primarily have had only to replace end caps on the cables. Plastic caps crack often (e.g. the Suntour cable housing caps), and some of the cheaper metal ones rust or wear at the hole. If I've had to change the housing, then the most frequently changed has got to be the short section for the rear derailleur cable that goes from the chainstay stop to the rear derailleur adjuster barrel. It's often too short for good shifting to begin with, and accidents or collisions or falling over and striking the RD cable kinks the housing just as it goes into a stop or adjuster barrel. Needless to say, it fixes one of the most common complaints: "The shifting on the rear doesn't work right."

However, not all is wasted. If long enough for good shifting, I can salvage the housing sometimes by removing it, gently straightening any kinks out (usually on the end that was going into the RD), replacing broken end caps, and then fliping the housing around and relubing the cable that slides into that housing.

I've rejuvenated many caliper brakes too usually by removing the housing, shortening it because it was too long, then adding a teflon liner (I use to carry bulk rolls of the stuff), and finally greasing the cable.

It's not that cable housing is expensive if you just work on your personal bikes especially when buying in bulk. But I've gotten much more cost conscious now because I host bike repair clinics for kids in K-12, and that quality, pre-lined stuff, while it works great, whether it's Jagwire or Shimano - is frankly, a bit pricey for the average volunteer to be forking over money to buy cases of the stuff. But sometimes vanity wins too. I consider housing colour whenever I swap seat bags, saddles, or handlebar tape/grip colours. Maybe that's why I rarely wear out my housing...