As a relative novice in AE I often get stumped in creating precomps.
Can anyone share their 'best practices' and tips when creating precomps, such as maximum number of nested levels, naming, when to include effects with a precomp and when not to, etc
Unfortunately there is no "one answer applies to all" solution when it comes to precomposing as each situation is different. I'd recommend that you either read a book or watch a tutorial that covers the subject of precomposing in detail. If you like watching training movies then the "After Effects CS5 Learn by Video" product by me and Todd Kopriva covers nesting and precomposing in detail. Or there's Trish and Chris Meyer's wonderful "Creating Motion Graphics" books that also cover this in detail.