A few extremely trustworthy standard sources are cited here.  Books are graded hard at Seven Stones, because interested readers and collectors find our shop, and we want you to come back and see what's here next month.  We live up to the expectations of some tough customers by adhering to these standards, plus a bit more.
IOBA Condition Description Definitions

For many years, the grading system defined by AB Bookman (now sadly defunct) was the standard in the antiquarian book trade. IOBA's standards, listed below, do not fundamentally differ from those standards though they have been expanded upon, and defined a bit more specifically.

(Condition normally shown as __/__, i.e., F/F, denoting first book & then dustjacket condition)

AS NEW (AN) or VERY FINE (VF) or MINT (M): Without faults or defects, unread, in the same immaculate condition in which it was published (Note: very few "new" books qualify for this grade, as many times there will be rubs/scuffs to the dustjackets from shipping, or bumped lower spine ends/corners from shelving).

FINE (F): Approaches the above, but not crisp. May have been carefully read and dustjacket may have been slightly rubbed or spine ends slightly bumped from shelving/shipping, but no real defects or faults.

(NOTE: From here on, there may be "+" and "-" in a grade, which will mean that it is above the grade noted but not quite to the next higher grade for "+", and that it is below the grade noted but not quite to the next lower grade for "-".

NEAR FINE: Also used, although not contained in Bookman's Weekly definitions, meaning a book or dustjacket approaching FINE but with a couple of very minor defects or faults.

VERY GOOD: A used book showing some small signs of wear on either binding or dustjacket. Any defects/faults must be noted.

GOOD: The average used and worn book that has all pages or leaves present. Any defects must be noted.

FAIR: A worn book that has complete text pages (including those with maps or plates) but may lack endpapers, half-title page, etc. (which must be noted). Binding, dustjacket, etc. may also be worn. All defects/faults must be noted.

POOR or READING COPY: A book that is sufficiently worn that its only merit is the complete text, which must be legible. Any missing maps or plates should still be noted. May be soiled, scuffed, stained, or spotted, and may have loose joints, hinges, pages, etc.

EX-LIBRARY: Must always be designated as such no matter what the condition of the book.

BOOK CLUB: Must always be noted as such no matter what the condition of the book.

BINDING COPY: A book in which the pages or leaves are perfect but the binding is very bad, loose, off, or non-existent.

Always, if issued with one, the lack of a dustjacket or slipcase should be noted.

Copyright 2000 by Independent Online Booksellers Association

It might seem after reading the IOBA standards that there is nothing more to say on grading, but there are other organizations, and many other standards in common use;  most are not that stringent.  The scale below is our own standard for hardcover books, cobbled togther from many descriptions and sources.  The references used to create it are so many and we've put so much afterthought into it that we now call it our own.  Please do steal it and post it wherever you like.
Mint Fresh off the press, no flaws, no sign of handling, shipping or shelving
(Rarely is even a shrink wrapped copy called "mint" here).
VF Very Fine Unmarked, unread, hinges are tight - shows faint signs of handling, but still clearly fresh off the bookstore shelf.
F Fine Words that might describe this category are straight, tight, glossy, and possibly unread.  May have very minor shelf wear, slight fade to extremities, or other single small flaw.  Clean, unmarked and outstanding, but not perfect.
NF Near Fine Very light wear;  still excellent, but possibly gently read.  Pushed spine ends and very minimal edge wear from shelving possible.  Any markings or age tanning earns even an otherwise mint copy a NF grade.
VG+ Very Good Plus A gently read copy. Very minor corner and edge rubbing, surface wear, fading or age toning are possible.  This is the lowest grade we consider collectible for the majority of modern books.
VG Very Good Light corner / shelf wear and pushed spine ends likely.  One or two of the following flaws may exist:  surface wear or soil, faint tanning to extremities and jacket, very minor extreme edge foxing (not visible in page margins), unobtrusive ex-libris stamp or name inside.  Text is completely clean and unmarked.
VG- Very Good Minus Hinges may be loosening up, but binding still strong.  Pages may have a light tan "halo".  Corners of boards are likely bumped or rubbed but not frayed.  A subtle ex-libris mark, a bookseller stamp, clipped jacket, or slight spine lean possible.  An ex-library copy in full regalia or a book with light foxing inside may be called VG- if there are no other faults.  This is the lowest grade we consider collectible for books over 40 years old.
G Good Well used but not abused.  Small surface stains, short closed tears, minor warp, spine lean, and page creases are possible.  Board corners may be soft or somewhat frayed and extreme edges worn thin.  Dust jacket may be missing.  Gift inscription possible.  Comfortably loose, but not shaken; binding and hinges are intact.  Text is clean and unmarked.
FR Fair Extensive cosmetic defects.  Expect stamps, stickers, some internal marks or warp, dog ears, cover soil or wear, board edge may be exposed.  There may be an inscription, missing end pages, ex-library markings, repairs, or a partial hinge split.  The binding may be shaken or quite loose, but not broken.  Moderate foxing, small paper loss, page tears, and brittle page edges are possible.  References may have neat notes in the margins or some underlining, but the text is complete and essentially clear;  It is a whole, still decent reading copy.
PR Poor Expect loose, cracked, or separated binding, broken hinges, warping, staining, heavy foxing, tears, significant paper loss, discoloration, soil, deep creases, brittle pages, damp damage, cup rings, and/or writing in the text.  These can be hard to read, due either to structural damage, or distracting flaws to the text.  Unless very old, rare, or otherwise special, these are probable candidates for the recycle bin.
This was originally taken from "The Paperback Price Guide #2" by Kevin Hancer, which is pretty much the book seller/collector
standard for grading paperback books, and detailed somewhat by skwishmi.
Mint As issued.  The book is absolutely brand-new and perfect in every way.
F+ Fine Plus Almost perfect.  The cover is bright, crisp, unfaded, and glossy with front and back at a 90 degree angle to a straight spine.  Clearly unread with minor signs of shelf wear.
F Fine Slight wear is beginning to show.  There may be very minor fading of the cover or spine, and possibly a very slight crease along the edge of the spine to indicate the book was carefully read once.  No major signs of wear.  Cover edges might have tiny bits of color loss, edges will still be square but not sharp.
F- Fine Minus May have been read carefully, but will still be very clean.  Stress lines on the spine will be noticeable but very minor.  No tears, creases or bends in the covers themselves.  Pages will still be white or very slightly tanning.  Corners are likely lightly bumped, and lamination (if any) may be slightly peeling at the corners or edges.  Very light rubbing or fading to covers, minor flaking or shelf wear noticeable on extremities.  Still a very nice copy.
VG+ Very Good Plus A read copy, but very tight.  Cover luster and gloss is showing wear but not gone.  Slight bends or creases in cover possible.  Pages are fresh, but may be tan or browning.  Stress lines on spine are noticeable, but not severe.  Minor wear spots, rubbing, and color flaking at the edges.  No tears or splits in spine.  This is the lowest grade we consider collectible for most paperbacks under 40 years old.
VG Very Good A read copy, but still fairly tight.  Cover lustre and gloss is largely gone, though the color is unfaded.  Plastic laminate (if any) is noticeably peeling in spots.  Some bends and creases in the cover are likely.  Pages fairly fresh and may be tanning at edges but are not brittle.  There may be a slight spine roll from reading, but the binding is not broken or torn.  Wear spots, chipping and rubbing is noticeable but not major.  No internal writing or tape repairs.
VG- Very Good Minus The average copy.  Cover has light bends or creases, and is somewhat faded but whole.  Small previous owner marks to end pages or inside cover are possible.  Spine is intact, though minor splitting may be present on either end and slight roll is probable.  Dog ears or very small tears could be present on some pages, which may show age toning.
G+ Good Plus Moderate reading wear.  Small closed tears in cover or pages, spine roll or small splits, bookstore stamps or a gift inscription is possible.  Possible price sticker damage on cover.
G Good Moderate reading wear, short closed tears, thumb wear to cover or pages are likely, as is a rolled spine.  Spine moderately creased, edges and corners show wear and chipping, possible short splits at top and bottom of spine.  Light stains or soil which affect the covers and margins are possible, but the text is basically clean.
(FR) or (A) Fair or Acceptable Heavily read copy.  Moderate stains or soil and heavy spine creases are likely.  Covers may have chips or tears, extremities may be somewhat fragile.  Underlining or highlighting of text is possible.  This book is still complete and readable.
(P) or (PR) Poor Indicates a copy with very serious defects.  There may be separated pages, broken binding, missing front or back cover, or heavy soil.  Moisture damage or stains that affect text is possible.  Only under very rare circumstances will you see these for sale.
Descriptions / scales not covered:  dust jacket grading, shades of age discoloration, specifics of binding damage, paper loss, marks, and tears.  Also not covered are variable collectible grading standards for items produced during wartime or under similar circumstances.  This much will suffice for here and now.

Some book sellers will describe a book as being "very good considering it's age" or other circumstance.  I don't.
The majority of books don't fit precisely into one category;  that's what descriptions are for.
A book that is old and rare enough may be collectible in any condition, but the condition still is what it is.

All of the following came from Mark's Vintage Paperbacks (link now defunct):
NOTE : Condition grades are not on a sliding scale according to age.
These grades are used equally no matter what the age of the book.
Perhaps we need to distinguish between "collectible" and "valuable".  Like most, the paperback market is driven by forces of supply and demand.  But because demand depends on so many overlapping factors, there is no easy formula for determining value.  In fact, were we to take all of the complexities of evaluation into account, a guide of this sort would be a virtual impossibility.  As it is, any price guide is at best just that, a guide.