First we see if there are any legal requirements for length of time such
as Sarbanes-oxley or something like that...
Second, set a standard retention rate policy for incrementals and fulls.
A customer can then ask for a deviation, or for special ones, like
exchange, once a month we switch the full backup retention levels to a
few years.

Our standard retention is 4 weeks or one month.  I would say 95% of our
restore requests are for data that has been lost, nuked, or damaged
within 5 days.  Occasionally we get a "I need a file from 6 months ago",
but very rarely.  And even then, its probably a file they didn't really
use much in the past six months, so one of the more recent backups will
have what they are looking for. 

Hope that helps,
Taylor