Just thought of an exception for smallest division; when using a timer always use 0.1
Even if your timer displays to 0.01s, still use 0.1 as this is human reaction. (My teacher says this is something you're expected to know and use).
For everything else, just use the smallest division (e.g. 0.001m for a ruler, 0.01mm for micrometer, etc. On digital readings its decimal places as shown on the display)
(Some people 1/2 the smallest division, although I've never done this. Can anybody explain why?)