The Date Book, the Address Book and the To Do List all have Notes functions. The Memos app doesn't because Memos ARE Notes. You use a Note when you need to write several or many lines of text on an event, a person or a task. When you should use a Note is when your Date Book event takes up too much of the day's display; or when your Address Book data is not a name, company, address, phone number or one of the Custom Fields; or when your To Do List task takes up more screen real estate than is useful for seeing more tasks.
Personally, I use a flexible approach to Notes. For example, I am taking Jane to dinner at Luca's restaurant. If this is a first date, I will duplicate Jane's Address Book address into my Date Book entry. Similarly, if this is my first trip to Luca's, I will type Luca's address into the Date Book entry. If I end up liking Luca's, I will add it to my Address Book. If both Jane and Luca's are old friends, I will not think to put either of their addresses into the Date Book entry. On the other hand, if both are strangers to me, I will put their addresses into my Date Book entry. I will only use the Notes function in this example if I have a busy day that day and want to see my other Date Book appointments at a glance.
I use the Notes function most extensively in the To Do List app, where I want to see what the list looks like more than I want to see one task's details. If a task goes more than 2-3 lines, I punch it into a Note.