I do tip. I picked up the habit in US/Canada and I like doing it. It's also a good way to get a round figure when you need to split the bill
I don't think it's as expected here as it is in the states (despite All Bar One's cheesy silver trays!). It's the norm in restaurants but not to the point where they forget it's optional.
I tip waiters, hairdressers, beauticians and taxi drivers. I don't tip bar staff unless it's a local and I buy them a drink (for some reason it's not done for women to buy the bar staff a drink, so I'll only do it when I am a regular or if we've got into a genuine converstaion) but I will often add a tip if I've been running a tab all night. In hotels I usually leave some money in the room for the chambermaid, and when I go skiing I tip the chalet staff. When we moved from Newcastle to London I gave the removal guys some cash and a couple of slabs of beer.
I usually go for around 15% rounded to the nearest £1. It gets a bit less accurate when I've had a few drinks though! And if the bill is more than £100 I tip a little less.
Taxi drivers get "keep the change" unless that would be less than £1 in which case I throw in another quid or two depending on the total fare. I tip black cab drivers who take me home generously because I want to encourage them to accept fares to South Tottenham!
I don't tip toilet attendants in nightclubs because I don't like them being there (although it makes me feel bad because I'm pretty sure they aren't employed, in fact they probably pay the club for the pitch, and what sort of a life is that?), but I do in public toilets if they have a coin tray out.
Basically, I go by gut feel. If I think someone will be insulted by a tip I don't, if I think they'll be embarassed and surprised but glad to get it I do.
I've only got it wrong (that I know of) once, in New York. On our last day we asked the security guy in our apartment block if we could leave our bags in his office as we had a long time before our flight. When we came to pick them up I offered him a tip but he wouldn't accept it.
Liz