Since my pre 1.5 soul shard guide is out of date I have decided to re-do it and talk a bit about basics of soul shard management.
Soul Shards are located near your health bar and you can have no more than 5 of them at any given time. The Soul Fragment system has been changed as part of the Assassin changes in patch 1.6 and Assassins will regenerate Soul Fragments at a rate of 1 every 8 seconds.
Every skill that uses soul shards in any way have information about in it's description.
There are 5 different mechanics related to soul shards management and those are:
Spenders are those skills that won't work at all without required amount of soul shards available. Miasmas (face stab, lotus dart, soul strike) need as little as 1 shard, but CCs need 2, Lotus Pollen as much as 3 and Avatar/Lotus Overdose a whooping 4. Most of assassins skills are spenders so if you find yourself out of shards your options might be very limited even if none of your skills are on cool down.
Consumers are those skills that will only use up soul shards if those are present. Snap Kick for example will consume shard if you have one, but there are no benefits to using kick with a shard. On the other hand Death Whirlwind/grave blossom will use all soul shards that you have, but the more they can consume the harder those combos will hit.
Lastly there are generators. Crystallized Lotus Extract will grant you instant 3 soul shards while Necrotic Empowerment will give you 4, but over the period of 16 seconds. Castration perk (gained via Alternative Advancement) will grant you 2 soul shards on successful combo hit. Lastly soul corruption will speed up your passive soul shard generation, but in it's current form it is not worth any investment.
Are there any benefit to spending/not spending your soul shards?
None. Soul shards don't provide any bonuses on their own. Think of then as currency that you use to "pay" to be able to use your stuff like CC. Anything close to soul shard related bonus are damage buffs to DWW/GB based on the amount of shards.
Why do assassins "pay" with soul shards for things that other classes have for free? (Fear/Stun).
Back in 1.6 CC worked differently: those were instant and you could effectively "stun lock" your target by chaining CCs together. Soul Shards were a system designed to limit assassins power.
How many generators do I need?
My stance on generators is that you need both Crystallized Lotus Extract and Necrotic Empowerment to be effective in both PVE and PVP
Should I spend my soul shards or conserve them?
It is very situational but my rule of thumb is spend, spend, spend and use Crystallized Lotus Extract and Necrotic Empowerment whenever the cool down has ended.