Generally, I recommend 4 sets of tees under 7000 yard tips and 5 sets on courses over 7000 yards. If the course is under 6500 from the tips, three might be okay. In some ways, I would recommend six, based on how tee shot length clusters around six basic areas, but that gets too confusing, so we accept some variation on the so called senior tees. That group comprises about 20% of golfers, and their tee shots range from 170-210, so we split the difference there.
As I alluded on the Augusta thread, golfers seem to more and more play where they have fun, and that seems to split up into many pretty predictable groups - with tees shots around 290, 260, 230, 200-170 (as per above) and 140 yards (usually women) It is surprising how tee shot distance, while naturally spread all over the board, has clusters centered on those distances.
I have heard the argument for one or two tees used, based on tradition, or based on rear tee players not liking the look of forward tees out in front of them, but as near as I can tell, the tradition was to basically screw anyone not man enough to play "the whole course." I favor setting tees based on the anticipated customer of today, not some mythical customer who we think we should force into playing for punishment value rather than fun, like Melvyn might.
but, maybe I am just crazy like that!