I've been using discourage at all levels. And they work. If spam comes to your board frequently, you need to ban, dicourage, ip ban, ip discourage. Since I've been doing it for years, I've seen the quantity of spam go way down. Way, way down. I only see a few spam here and there. Never VB[2] days levels of spam.
Discourage actually puts your user into a neverending revolving door. Use it.
I have used the discourage option myself a few times, mainly for spam accounts as well as those who like to cause issues and keep coming back under new accounts to cause more issues.
It is a good feature to have for sure and ideal to help with issues if you get them.
I've never used this feature out on my forum before. I honestly didn't even know it existed until I read this thread though. But seeing how I use Woltlab now for my community, I'm not even sure if it's got the same feature or not.