I attended a (primary and secondary) school with no grades and it was great! Since the classes were small teachers evaluated each student on their progress at the end of each term. At the end of the year your adviser synthesized these evaluations into a year-end evaluation. While I full embraced and benefited from this system, I don't see how an evaluation system could work at larger scales or where students haven't fully accepted the institution's philosophy of education.

By the end of my first semester of college I discovered an (unfortunate?) consequence of growing up with no grades: I had no idea how to aim for a specific letter grade. In many Biology courses that I enjoyed and thought I had "done well in" my final letter grades were lower than I expected. Eventually my grades came up as I learned to focus on them (and this thing called GPA) but I don't think I learned more than I had when I was just working because I wanted to learn.