California is the first of that case that I've ever heard of. As has been stated many times, most people working in this industry need their tips to get by. I've been on the back end. Not getting paid what I should. Getting pissed when I was stiffed. That's what people don't seem to understand. Even some of you on here. People need these. (Apart from California, I guess.)
I can speak for the other side as well. I'm in Japan right now where there is no tipping custom. However, prices on food seem to be slightly higher - the service is figured into the prices to begin with.
Personally, I think this system is better, because it makes the "tip" necessary, whether you think about it or not. We could do the same thing in the states, but you couldn't call it the "service fee". People would get quite angry. It's really a system that's hard to get out of. You start charging more, and the people who get good deals by not tipping will start to complain.
I think I'm making sense?
Anyway, I always tip 20% unless something goes really bad. If they don't work up to a standard they're expected, they don't receive the the money they've expected.