Really what we mostly do is apply only the scale when it comes to transforms. Location and Rotation very rarely do we apply it. But it's better to apply the scale because otherwise Blender wont know the real size of the object and that can cause all sorts of troubles. When you scale an object up, you are manipulating it's coordinate system basically, Martin can correct me with that, so Blender thinks the object is still the same size, until you apply the scale and Blender then goes oh ok ok ok, this is actually bigger, got it.
I won't need to correct Omar here, because he is absolutely right!
I answered this a bit more in-depth here:
https://cgcookie.com/community/19173-applying-transformations