In Photoshop 6, the auto levels auto contrast options did not produce sufficiently good results that I gave up using them. The new Auto Color command in Photoshop 7 indicates that Adobe have made some changes that can be very useful, but it is important to understand what is being done and have the default options set to suit your requirements. Clicking the Options button in either the Levels or Curves dialogue windows reveals the following window:

This is what the on-line help has to say about each option:

Specify the algorithm you want Photoshop to use to adjust the overall tonal range of an image:

• Enhance Monochromatic Contrast clips all channels identically. This preserves the overall color relationship while making highlights appear lighter and shadows appear darker. The Auto Contrast command uses this algorithm.
• Enhance Per Channel Contrast maximizes the tonal range in each channel to produce a more dramatic correction. Because each channel is adjusted individually, Enhance Per Channel Contrast may remove or introduce color casts. The Auto Levels command uses this algorithm.
• Find Dark & Light Colors finds the average lightest and darkest pixels in an image and uses them to maximize contrast while minimizing clipping. The Auto Color command uses this algorithm.

Snap Neutral Mid-tones: This option should be checked, if you want Photoshop to find an average nearly neutral colour in an image and then adjust the gamma values to make the colour neutral. This is also used in the auto color command.

Clipping %: effectively this determines black and white points. Using a non-zero value is designed to avoid problems caused by "extreme" pixels .