I started talking about this subject with Eonite in his "Vue Clouds" post but I think it might be a good idea to start a new thread for it (for the sake of keeping the Vue Clouds thread on topic if nothing else.

So here, I simply paste the text I posted on the other thread.

It is indeed complex when it comes to finding the right settings (in fact, I became aware of the whole "linear workflow" problem about 5 years ago when it became "the subject" among mental ray users aka "to be linear or not to be".
I haven't had time to play a lot with 8.5 yet (my new computer components actually arrived on Tuesday, so as you can imagine, still installing, customizing and stuff).

Now, when it comes to "using gamma or not", they are (as for all things in life I guess) many schools.
Here are for me the important points:

Always using the right gamma for the various color inputs (most of the time it will be 2.2 since most images are created with this gamma - main exception being the various REAL high dynamic range images which should not be corrected - gamma = 1). A good way to know if 2.2 is the right setting is simply to open the image in your image editor: if it looks right on your screen, then its gamma is the same as your screen, probably 2.2)
E-on engineers did something very clever in their implementation: any texture used in one of the gray scale channel automatically use a gamma of 1, which is what you always want (a gamma of 2.2 for a bump or displacement channel is BAD :) )

The right settings for the "Gamma option" dialog are in my opinion:

Display Gamma = the gamma to which your monitor is calibrated (usually default to 2.2 but if you use a hardware calibrator, you can find out that your display looks "better" with a gamma of 1.8, sometimes even less on very high end monitors).

Affect Color Editor = checked (that way, the color editor apply a negative gamma to the color switcher, what it does is showing you the color you want, but sending to the render engine the color it excepts).
Affect Material Preview = checked (for the same reasons as above).
Affect Color Functions Preview = cheked (same reason)
Afect Scalar Functions Previews = checked (same reason)
Preview Gamma and exposure in main view = checked (it allows you to see the final result as saved for your current display gamma settings, if unchecked things will look darker and you might tend to increase the lighting intensity and send "bad" information to the render engine.

Texture Maps Input Gamma = 2.2 (you can override on a per texture basis when loading them if you know that a texture was created in a different color space / gamma space.
Output Gamma = 1 or your display gamma (here they are no right or wrong, it all depends on what you do with the image: basically, if you save it to a low dynamic range format (8bpp) then it's better to back the gamma in it (use the gamma of your display or, 2.2), if you save to a high dynamic range format (16 bpp or more) then, go for an output gamma of 1, it will give you much more freedom in post composition.

As for the clouds being washed out, I noticed that too, there might be two reasons to that: maybe e-on didn't yet (or forgot) to take the gamma correction into account for the auto-exposure control (an easy fix is to lower the exposition, around half a stop seemed to be good here)

I hope it's helpful, I'm aware that my poor English is a bit limited to explain such a subject :) (French are NOT gifted for foreign languages :) )