How to take care of my iPhone's Battery?

I hear a lot of things.
Such as keeping it at a high level will help boost its battery life.
While I also hear that if you drain it out occasionally, it will also boost.
Which of those is true?

Keeping at a high level at all times will work. Getting something like this:
http://www.mophie.com/mophie-juice-pack-air-iPhone-4-4S-battery-case-p/1145_jpa-ip4-blk.htm
That can charge the device at all times will extend the life of the built-in battery. It may seem expensive, but it's very easy to replace, unlike the built in battery.

There's a lot you can to do to boost your battery life. Turn off Wi-Fi, bluetooth, location services when not being used. Close apps your not using but are still running in the background. What you mentioned about letting it drain completely is called cycling the battery, and does help extend the life of the battery. Charge it up to 100% and let it die completely before charging it again. I try to do it once or twice a week if my schedule allows it.