Paragraphing depends on the style of writing. Journalistic paragraphing is quite different from technical report writing, for example.
Paragraphs are used whenever the thought/idea shifts. Easier said than implemented, of course. I prefer more frequent separate paragraphs as it is easier to read. Just as short sentences are easier to read, so are short paragraphs.
However, you can usually justify keeping related thoughts into a single paragraph. All of this reply, for example, could have been one paragraph.
Or more.
Sometimes paragraph breaks (as the one above) are for dramatic effect, just like a two-word sentence (okay, it's not a proper sentence, but you get my drift I'm sure) is a wake up call in a dreary academic drone which this is becoming.
So, I'll quit.
