The earlier the better IMO. My main local league usually drafts late August, but by then most of the preseason battles have been played out and there aren't as many crazy values left on draft day. An early August draft gives the prepared owners the most advantage IMO.
Pre-August is a lot like gambling with injuries and such, but a good picks can be made in extremely late rounds with a little foresight. I'm still bitter from a few years back when we were drafting in the middle of preseason, it was like the 9th round of the draft and it was announced on ESPN that Kevan Barlow was traded to the Jets. Guy picked up Frank Gore with the very next pick and went on to win the league. I was the next pick on the board