For some reason, I always wait for it to be flashing red before I charge it. But if I were you, I would at wait until the power thingy turns blue to red until you charge it.
Personally, I've never seen a decline in my 3DS batteries no matter what I do. I've charged them while they were on, left them in my bag for a week straight on sleep mode (they died of course, but recharged fine) and have let them drain completely a few times.
I mean, I don't do all that intentionally... Sometimes I leave them at home completely off, so I guess I haven't really 'worn them out'. I really don't want to actively try.
Sidenote; it's different for PSPs, though. Charge that thing while it's powered on and your battery will fry faster than potatoes in cooking oil. Even the old DS handles it better.
I haven't noticed a decline in my ds's battery. Mine usually ends up running out, I will let it run in sleep mode for like a week then when I pick it up again the battery is dead.