There is some debate about how much Google uses the clickthough rate of the organic listings to affect where you are listed.

However, with two recent examples for our clients giving demonstrable results, one dramatic and one less so, I certainly believe that the clickthrough rate is used for determining your position on a page. 

In our dramatic example, a UK based holiday company gained a Google Local Map result attached to their listing. Unfortunately it was not their map listing, but some random hotel in the USA. As a result, they experienced a dramatic slide off of page 1 for the majority of their search terms over a period of 1 to 2 weeks. As nothing else had changed, the only explanation for this is that the US address put UK based searchers off clicking on their link. (Thanks Google, that error is a pain to fix).

The second site is one that has good organic rankings for a competitive phrase, and is on the first page, but does not seem to be able to move higher. Despite having good authority and plenty of backlinks it's stuck at the bottom of page 1. And the reason for this is a particularly odd page title that alternates to contain different brand names. Which makes it appear to a searcher that the brand only sells a single brand which is a negative for the user, and dissuades them from clicking on that result, so the click rates constantly fight with our linkbuilding efforts.

Personally, with a lot of looking at Google results, I'd say that most of the time, the click through rate is not any more important than any other of the 200 odd elements that go into the algorithm. However, we do have recent evidence that Google uses the clickthrough rate to determine if a site is the most relevant for a search, at which point it adds Sitelinks, and more recently the ‘search within a site' box. I would suggest that this is determined by if the searchers click on a particular link more than average. So a result where people do the ‘teleporting' behaviour, such as a company name or brand search, is clicked considerably more than the others on the page.

And with these personal examples, it shows that clickthrough rate can become a factor if all else is equal, so don't neglect the ‘clickability' of your titles and descriptions.

Here are some other resources you might be interested in if you want to find out more about results pages and user behaviour:

Other factors that affect clickthrough rates for organic
http://www.getelastic.com/short-urls/

Leaked AOL data gives an average of the clickthrough drop off down the page: http://www.redcardinal.ie/search-engine-optimisation/
12-08-2006/clickthrough-analysis-of-aol-datatgz/

Also some eye tracking studies show similar data:
http://www.seoresearcher.com/distribution-of-clicks
-on-googles-serps-and-eye-tracking-analysis.htm

About writing better meta descriptions and titles for people, not just search engines, plus some information on how to use Google Webmaster Tools to determine which are your best performing combos.
http://hamletbatista.com/2008/01/15/writing-for-people-and-search-
engines-how-to-improve-click-through-rates-for-organic-listings/