There used to be an ancient rant here about the best way of numbering software releases -- and although many of the things I wrote back then are still valid, for various reasons I don't like the old text anymore. I may or may not write an updated essay at some point. For now, you are probably better off checking out "Semantic Versioning" instead: while it's focused only on API-presenting software, most of the ideas align pretty well with my own conclusions (except for some qualms about pre-release versioning) -- and they are explained way better than my text ever did...
If you really, really, really want to see the old text, I have kept it around though.