First, the basics
Most laptops use batteries that can last for 3-5 years, or about 1000 charges. (A premium laptop's battery might last longer.) Every time you charge your battery, the total capacity of the battery is diminished. Originally it may have had a run time of 3.5 hours, but after a year it'll run out of juice at 3 hours, even on a full charge.
Calibrating your Battery
First, charge your laptop's battery to full, and leave it that way for at least two hours. Then unplug your laptop, and set its power management settings to never turn off or lower the monitor brightness. (HP has instructions for how do to this on Windows 7 and Vista, as well as Windows XP, while Apple has instructions for Mac laptops on their site.)
Best practices to maintain battery lifeIdeally, you'd use your laptop unplugged at least once a day, like on a train or bus commute or on the couch in front of the TV. If you're not going to use it, constantly charging your battery is a bad idea; HP recommends on their website that if you're going to leave your laptop plugged in or put up in storage for more than two weeks, you should take the battery out of your laptop.
Past the expiration date
e-stewards.org has a list of environmentally responsible recyclers that will take your old battery with no fuss.
When is it time to replace your battery, then? Use the free utility apps Becky mentioned, and when they say that your battery can only hold around 25% of its original capacity it's probably time for a new one. You can buy a replacement battery from the original laptop manufacturer, and there are plenty of places online that sell discounted PC laptop batteries, like Laptops for Less and Batteries.com. Owners of newer Mac laptops can get their laptop's non-removable battery swapped out at any Apple store, with a scheduled appointment.
