"In this paper the authors examine460 of the S&P 500 firms to demonstrate that: (1) implied volatility is a better forecaster of realized volatility than historic volatility or GARCH models and (2) the information content of implied volatility significantly decreases with liquidity."Both points are important. The first says that markets are good at predicting future volatility, but the second shows the limits of markets where there is little volume (an important consideration given the large number options that rarely trade.
Be sure to check this one out! I know the authors ;)