The only reason I would say it would be appropriate to delete an account would be if an account is perma banned and all the posts have been deleted and no PMs have ever been sent/received (other then the PM notifying a post has been deleted). There is also somewhat of an argument to delete accounts that have never posted period and never sent/received a PM after several months, although this argument is somewhat weaker.
If the account has posted or has sent/received a PM then it absolutely should not be deleted.
I think even in the 'perma banned' scenario you want to leave that name banned. Otherwise how do you prevent either (1) the perma-banned user simply resigns up under the same name or (2) some other user signs up under the banned name? In (1) the perma ban has failed. In (2) an unwitting user just inherited a terrible reputation.