Two words: Target Fixation. The #1 cause of crashes for beginning and/or crappy motorcyclists. You tend to go where your eyes are pointing. So if you stare at the oncoming traffic (or for that matter the outside edge of a tight turn) -- you end up getting way too chummy with it. Same thing applies in an automobile, but the effect is much more pronounced on a bike. After 25+ years riding I have very different reactions: I see where all the moving objects are in the scene, and my brain automatically plots a course that gives me the most clearance possible from all of them, weighted by how erratically they're driving. Definitely steer well away from the center line, as I have had oncoming vehicles cross over into my side of the road more times than I can recall.
Tom -- all other things being equal, it's not a bad idea to ride left-of-center to maximize visibility in the side/rear view, but I put very little faith that the average driver will actually see me more than about 10% of the time. Just too small a profile to register. Also, other things are seldom equal, what with distracted drivers, crap in the lane like dirt, oil, wet leaves, couches (yes couches -- friend of mine's brother once hit a full-size Sofa on the freeway doing 90mph on his Ninja -- not pretty), and assorted other hazards.