I read this article at T-nation: (skip the stuff at the top unless you don't understand about protein, amino acids etc)
To me it raises a few interesting points.
Firstly the body fat thing. I agree with the author that you wouldn't see a change between 13 and 16% as you would between 10% and 13%. Therefore a lot of people underestimate their body fat or don't realise how much fat they put on. People do claim things like "I put on 15lbs in 2 months with no fat gain" but I agree with the author that they probably just don't notice. I'm not a training expert by any means but I find it hard to believe anyone (apart from a complete newbie) could get those kind of results without gear... even then 15lbs of muscle is impressive.
I was skinny my whole life until I started bulking and gaining weight so I DO have skinny-guy mentality. But to me, I'm at around 12-13% right now and starting to feel a bit fat because I still get a stomach podge when I sit down and it isn't too flat when I relax my abs either.
I know a lot of people who would say to bulk until 20% but in my opinion that is going too far. Those extra pounds of fat just mean more and more grief when cutting. My cut off point would be 15% and in fact I'm thinking of doing a little cut now to get back to about 10%.
I know everyone has different standards but the article raises some interesting points when he says that as the body gets higher in BF%, it becomes more adept at storing fat too. I'm not sure if this is true or not - does anyone know?
Also the higher BF% you are at, the longer you will have to cut - therefore the slower your metabolism will get as you reduce calories for a long time, making it harder to shift the fat.