Too tight a steering head will give you low speed wobble and trouble keeping the bike pointed in a straight line. Too loose will give you trouble at high speed. You want them tight enough, not as tight as you can get them.
Bearings should spin freely. If you tighten the steering head to the point where the bars don't fall to the side, or do so very slowly, your bearings are too tight and are perhaps getting damaged. If the bearings are shot, you cant fix that with more preload because that amounts to adding axial force to fix lateral slop. Harder to notice on something like a steering head as opposed to a set of wheel bearings.
Too loose and you will have free play. Bike on centerstand, front wheel off the ground, grab the forks from the front and try to push them fore/aft. I rode a Yamaha with a totally shot steering head set. When I hit the brakes I could hear a little thunk and the bars would move forward as they pivoted at the bearings.
Steering heads are usually neglected. As the grease dries up they get stiffer, and I think many of us get used to that feel. Poor cable routing also will add to the stiffness.
