IMHO the 'screen dimming'-and-displaying-of-warning-window feature (?) in Windows is extremely annoying, since I routinely run software that does require the permission to modify a lot of things. I must confess I'm not familiar with the underlying mechanisms of User Account Notification. Is there any benefit to leaving this notification enabled? Or can I just do away with it and still sleep well at night?
It depends on your environment. For a lot of users it's another layer of security which is basically telling the user to rethink what they are doing in hopes that if it is something bad, they won't do it. However a lot of users will instantly click yes and not even think about it. I personally have my UAC set to "Notify me only when programs try to make changes to my computer", which does not notify me when I make changes to Windows settings. Therefore it isn't as annoying when I make changes, but it could still alert me if a rogue program is trying to make a change that I wasn't aware of. When I see the box pop up I can rethink what is going on.
Yet again, in the end it depends on you and your environment. Many organizations think it's a good idea to have, but in the long run it's easier to just turn it off due to complaints from users and/or upper management. No matter what, user training and education is going to be the best defense.
Edit from comments: I can definitely agree that this isn't the end all solution to stopping malicious software. While the user not having admin rights, antivirus/antispyware, local firewall, HIDS, etc will be your last layer of hopefully blocking anything malicious from getting to the computer. The UAC will just potentially warn the user of the final steps of it. It's a small layer, but still another layer defense