404 pages are one of those annoying things for BOTH webmasters and users. Webmasters hate them as they need to be dealt with in some way and users hate clicking on a link and finding nothing at the other end.

So what should you do in regards to 404 pages?

Some people leave them alone, others apply 301 redirects to all of them. Basically I think you need to do a mix of things depending on your site.

The first thing I would do is create a nice relevant 404 page (see some great ones here) and then leave your 404 pages be. However, there are some instances when you should do something differet. Here they are:

1. Your 404 page receives links to it from external sources
I would: 301 redirect it to a relevant, useful page that needs the extra link juice.

2. Your 404 page gets a substancial amount of user traffic
I would: Either 301 redirect this page to an already existing page that is relevant to what the user is expecting to see, or I would create a new page at this exact url, once again basing it around what the user expects to find.

3. You have an existing page that users should obviously reach
I would: 301 redirect your 404 page to that specific page.

So basically I’m saying keep ‘your nice looking’ 404 pages alive unless you are losing a significant amount of traffic or link juice. Users tend to get confused easily, so redirecting all 404 pages to your homepage or sitemap may actually cause more harm than good.

It pays off to take a good look at your 404 pages along with any traffic or links that maybe pointing into them. Randfish from SEOmoz seems to think along the same lines, check out his post about 404 pages for more info.