It really depends. You have to use your judgement.
For things that have over 100 reviews I find they are more accurate. Less than 20 reviews you gotta worry about the business 'padding' their reviews. Anything in between there, you gotta read and evaluate for yourself.
Also you may have different priorities than the reviewers. I find a lot of yelpers with restuarants can be very cheap. They complain if something costs a bit more than what they feel they should pay. For example: my favorite Vietnamese place used to get dinged because their pot stickers cost more than a competitors. Well, they handmade their potstickers in house, from quality ingredients. The other place defrosted frozen wholesale ones. But cheap-o reviewers only care about cost, and not quality. So... I take reviews with a grain of salt when they complain about cost. I often find there is a good reason for the markup, and am willing to pay more to eat fresh quality food instead of the alternative... even if it means paying a bit more.
That said this place gets 4 stars. And the food is execrable. I mean... just plain disgusting. http://www.yelp.com/biz/country-way-fremont-2 Plus the place is dirty and the service is slow. 800 reviews. it just boggles the mind. The only thing this place is, is cheap, plus they give you big portions of the stuff they try to pass off as food. But if you consider the actual food quality (and cleanliness and service)... its expensive, cause the food is just that bad, that they should be paying YOU for having to choke through it, not you paying them.
We use yelp for a lot of things and haven't been burned yet. Everyhthing from doctors and moving companies to restaurants and hotels. I'm sure now that I've said that, we'll get an unpleasant surprise though!
I've read Yelp comments sporadically over the years but in the end they never really contribute to my decision. I've left comments, but have been (imo) fair and honest. We really only rely on word of mouth recommendations or warnings if we're trying a new restaurant or service. We don't travel that often at the moment and as of now we live in a small-ish community (80k with student pop.) Yelp's great if you do a lot of traveling or move around a lot, or if you live in a large metro area. For a small town, it seems like just another marketing tool.
I find reading yelp reviews very entertaining, especially when I read negative reviews of places where I've received bad customer service. Oftentimes, there are many reviews which state the same things I experienced. I never have left a review on yelp.
I agree with you, it's common for people to be really harsh with restaurants.
It really depends on the area, too. I found this out recently. I love using Yelp to find new eateries around here in Los Angeles. Usually a 4 star+ restaurant with over 100 reviews is something I would love to visit. I usually leave happy.
SO is in the Inland Empire now. He used Yelp to find the best Thai restaurant out there. The food wasn't even Thai. They stuck in random vegetables that seem "Asian" in their Pad Thai. It looked like stir fried noodles from Panda Express. It had very high ratings and is considered the best Thai restaurant of the area. The poor non-cultured people of the IE really must not know any better.
I think Yelp is fairly trustworthy. I usually read the reviews and make my own judgement after visiting the establishment unless the same criticism appears over and over and then I avoid it all together. So far I haven't been burned.