I'm 6', 180lbs. I have mine on 4 and it feels about right. 3 was too soft. I would guess that any higher than 5, for people of our size/weight is going to render the ride harsh.
I'm guessing that the factory "3" setting is for riders of about 150-160lbs. I rode it on 3 for quite some time, even hauling fairly good size loads (~40-50lbs) on the back. Granted, that's less than most pillions would weigh, but more than just your average, small saddle bag. There were times that it felt like it wallowed, so I went up one click.
If I were to haul those loads again, I'd be interested to see how it behaves. If it were blowing through the travel, then I'd go up one more click, but I don't think I'd go beyond that unless I started hauling a passenger or full luggage on a regular basis.
As has been mentioned, the best way to determine the optimal setting is really by measuring the sag.
There are some decent sites on the web that dispense with good suspension set-up info. I'm lacking in linkage but will follow-up later if I can remember... Google is your friend.
I'll offer this and hope to not get my head chewed off:
It's important to consider that making an adjustment on one end can affect the behavior at the other end. If you make a large, or too large, adjustment you can really muck up the ride balance/characteristics.
For an example, if you were to make the ride too stiff in the rear, when you go to turn in, the front may be somewhat supple and responsive but the rear end will feel stiff and jittery. You may be able to "feel" the front tire because its got useable travel with which to work, it can respond to surface changes, whereas the rear may be too far through its useful travel (too many clicks, too much compression damping) and the stiff rear end becomes a bit of a liability as it can no longer react to changes in the surface of the roadway.
So if you feel that you want to stiffen up the shock a bit and it feels "better" you might also consider changing your fork oil, too.
It's best to make small changes. Not too many at one time. Document what you do.
Unfortunately, the stock shock absorbers on our beloved bikes are pretty basic units. This is why many folks drop the cash on an aftermarket unit that's been set up for the bike, and their weight and riding style.
My .02. Change gladly given...
