I've seen the "would you hire this person again?" question asked more often than anything else.  If the reference being phoned pauses for a bit before replying, and seems to be struggling for something positive to say about an applicant, it usually tells you all you need to know.  It seems that folks on both ends of the phone are hesitant to go on record saying something overtly negative about an applicant.

And on a related note, just read an interesting article linked below.  I wonder if anyone in CRM may be utilizing such services. Many of the reference phone calls I've been privy to have been short, and there are a lot of mom and pop companies out there that people haven't necessarily heard of, so this could probably work for someone.  For a more senior level position, I would certainly hope that the reference check would be more thorough.

From CNN/Careerbuilder: Should you fake your job references?

I ask the "would you hire this person again?" question and tend to put more weight on references from supervisors at companies I know are real and instructors from schools that actually exist. I also look for the names of people I know directly or with whom I am familiar as references. I will also sometimes ask supervisors from companies an applicant has listed in his/her resume about the applicant, even if that person is not listed as a reference. 

I also find that it's good to focus on the positive. When a glowing reference is given, I try to listen for the specifics and not put too much weight on intangibles.

I also find that I am able to do a lot of filtering early on, based on the quality (or lack thereof) of the cover letter, resume/CV, and overall presentation. Spelling, grammar, and typos count! 

As someone who has hired in the past, and been burned, I would argue against any fabrication of experience abilities.  If you are found out, chances are you could be fired on the spot for lying.  Plus, it does you no good if the supervisor asks you to do something that you supposedly have the experience to do, but can't - just makes you look like a fool. 

Case in point - years ago I had a new worker come to my crew - I knew this person had been around for years and assumed he knew how to handle a transit and stadia rod (am I dating myself here?).  When I asked to be certain, he assured me he had worked with them many times and knew just what to do.  About five hours later I checked on the progress of the mapping and it became clear that he may have had lots of experience - at holding the rod - but had no real understanding of how to do the recording/mapping side.  After trying to decipher the mess - I started over myself, and in about 20 minutes had covered the same area it had taken him 5 hours, and I now had a usable map.  This person was great worker, and I loved having him in the pits, but needless to say, I did not ask him to run the transit again for a long time, and then only after I had worked with him to be sure he knew what to do.

As for calling references, it depends on the level of work I was looking for.  The higher the level of responsibility, the more I want to know.  Also, there have been cases where the work I have seen is so questionable, I have gone so far as to call the listed academic institutions to insure that a person has the degree they claim - and found on several occassions that those were faked.  Of course those issues were quickly addressed on my side, and the schools then had to decide how to proceed from their end (most don't take kindly to someone committing fraud using their name - especially when their work does not reflect well). 

Bottom line is - get the experience, work hard, ask good questions.  Volunteer if necessary.  Expect references to be checked.

Yes, you're dating yourself. Was the stadia rod graduated in cubits?

Awesome thanks for the responses!

Here's something you have to consider, too: If someone is still employed with a company or agency, but is looking for another job, they just might be given great references so someone else will hire them and make the worthless waste of food someone else's problem. This appears to happen a lot in government...

I think rkeyo's point is definitely one to consider. Passing a problem on down the line is a method that has been used both to get rid of someone and to avoid retaliatory legal harassment.

LOL - 
 
  The stadia was not in cubits, but the first one I worked with was made of this very unusual material - wood - with numbers and bars so worn that they occasionally needed to be remarked.

  I also used to work with tools called a Brunton, a compass, and a plane table and alidade - ring any bells for anyone?

  
Title: USGS Topographer at Work
Description: Topographer George Stanley Druhot with a plane table and alidade. Recorder R.H. Moore is sitting against the Pierce Arrow in the background. A stadia rod is visible on the second car.
Location: Fullerton, CA, USA
Date Taken: 4/1/1932
Photographer: , U.S. Geological Survey
Usage: This image is public domain/of free use. Please refer to the USGS Copyright section for more details.
Source: Western Region Science Information and Library ServicesGeorge

Yes, those names should sound familiar to any real archaeologist. The Sumerians could not have built Babylon without Bruntons.