This article, from New York Magazine, is a very interesting study of how different forms of praise can affect children's willingness to try new, unfamiliar things. It turns out that children praised for their effort are much more inclined to adopt a positive attitude toward challenges than those praised for their attributes. That is to say, smart kids who are told they're smart are much less likely to engage in difficult tasks, instead avoiding learning experiences that they fear may demonstrate their lack of ability at something. The effect is so strong that preschoolers show signs of sensitivity to it.
As one who was praised for intelligence rather than effort, and who received even greater praise for natural success without trying hard, this resonates tremendously. I've been trying to cultivate a mastery orientation toward learning--comprehension and application, not just the former. It's been hard, especially since I'm not used to tests and competition anymore. Not only that, but challenging myself to try things I'm not naturally good at automatically results in anxiety and a sense of being a faker. I understood all too clearly how important "effortless perfection" really is. I was so attuned to my parents' need for me to be such that I hid a spelling test that I failed in first grade, along with my gym class report card. I wasn't supposed to get anything but an "E" on any assignment.
It would have been nice to have less of a fear of being challenged. So parents, instill in your children a sense of worth through hard work, because that's something they can control more easily than IQ.