I agree with Bruno Pereira that we should not make reputation on our site work like karma on Launchpad. Of course, you'd expect me to say that (I have over 60k rep, after all).
What I want to add is that I don't think the primary purpose of either reputation on our site or karma on Launchpad is -- or should be -- to incentivize participation. That is one of its purposes, of course, and it seems to have that effect. But a user's reputation is supposed to say something like, "This user has said things people found useful before." (It is also used to control access to some features of the site, based on the idea that people with enough experience will probably use those features properly.)
One would never look at an answer and think, "This answer says X and its author has lots of rep. I will believe X!" One might take the author's reputation into consideration, but it will never be more important than the post itself.
Similarly, I don't think "If I say X, I'll get lots of rep. I will say X!" is the best pattern for contributing to the site. We're all volunteers here, and it's not like rep can be traded in for cash.1 Aside from being a way to learn (both asking and answering questions involve learning), I recommend thinking of Ask Ubuntu as a way to identify things you think should happen in the world2 and making them happen by doing them: "X should exist. I will make X."
Just to be clear, I am not saying we should all be here for the same reason or that it's wrong to want rep and act on that desire. I have nothing against anyone whose use of the site is mainly motivated by rep. But I recommend reading Jon Ericson's (remarkably well received!) Meta.SE post The problem with extrinsic motivation, as well as this answer. I have found the approach to "ask and answer questions about topics that I'm actively learning" to be useful, myself, and it's something I'd encourage everyone to at least consider.
I think the purpose of karma on Launchpad is to show how actively contributing a user currently is and has recently been. From the glossary:
Karma: Karma is a score that gives a rough idea of a person's current level of work in Launchpad. See our guide to karma for
As Bruno Pereira says, "No one cares about karma in launchpad (at least not to be worrying about it)," and I consider that a feature, not a bug. Asking and answering questions is important, but there's little risk that people will think AU rep is a measure of someone's overall contribution to Ubuntu, because it's readily apparent that many other things that go into Ubuntu -- like writing actual code and debugging it until it seems to work right -- happen mostly in other places. In contrast, Launchpad is the broader of the two sites: it has answers, but also bugs, code, blueprints, and translations, and covers way more projects than just Ubuntu.
Even though it's not given as one of the official reasons, in my opinion the most important reason for Launchpad karma to decay is to avoid fooling people into thinking it's a measure of a person's overall value to the whole community. This is not generally quantifiable, and even if it were, Launchpad participation couldn't reveal it since a lot of the work that makes Ubuntu better happens in other places: upstream projects (GNU and Linux, among many others, often hosted on GitHub and such places), Debian, other distros, Canonical, here on Ask Ubuntu, the wiki and help, forums, LoCos, and way, way more. (For example, have you ever SSHed into -- or out of -- Ubuntu? That's thanks to OpenBSD.)
In conclusion, I don't think it would be good to incentivize scurrying to maintain a high rate of posting. Reputation is a compelling idea -- more compelling, perhaps, than it should be. If any major change to the reputation system on Ask Ubuntu (and, more generally, Stack Exchange) is to be made, I think the goal should not be to increase the power rep has over us. If anything, it would be best to decrease the amount of motivation that comes from rep, so as to encourage us all to work on the things that interest and inspire us.
Reading a high-rep user say people people shouldn't worry so much about rep may make you suspicious. And it should -- please take all these ideas with a grain of salt. But I urge you to take rep with a grain of salt, too.
1 It's true that recruiters and interviewers often look at candidates' contributions on sites like Stack Overflow and Ask Ubuntu. But the main thing they're looking for is probably not the reputation score itself.
2 Of course, not everything worth doing in the world can be done on Ask Ubuntu. No matter how fastidiously one participates in the site, some things must be accomplished elsewhere. Some aren't even about Ubuntu! Therefore it is not just the green rep icon that users are well served to keep in perspective, but the red notification icon, too.