Beta's are one of your first lines of defense before sending your manuscript out to be shopped.
They are a fresh set of eyes. A new perspective. A trial run. And, they might also catch a few mistakes too. =p
Don't rely on just one though. Not all Beta readers are alike. Everybody has different strengths and weaknesses when it comes to technical reading. Some are better with flow and feel. Some are sticklers for the rules. Some are just good at responding (like laughing when they are supposed to. Think of them like the person screaming at the blond in a horror movie "don't go in there!! That's where the killer is hiding.")
It's best to gather a wide variety of reads before you move on to sending out your manuscript to an agent (or for those who self publish, sending off for final editing.).
A good Beta reader can really help you polish a manuscript. But, what makes a good Beta reader?
Well, an eye for detail is a good start. You want someone who can read with an active eye for problems.
I'm asked to beta read on occasion and I am happy to do it for my friends. Whenever I read I try to keep that active eye working.
In my opinion, and you can disagree, it's the way a Beta notifies you of problems that separates the good from the ok.
Notice I didn't say bad. I am not trying to be nice here. Sometimes blunt honesty is all you get. That's ok.
I'm not saying a reader that coddles you is ok either. You don't improve if you aren't told where the issues are in your writing.
What separates the good from the ok is the explanation.
To me, it's not enough to have a problem pointed out, I want to know why it was pointed out. Was it a rule I broke? Was it something that took you out of POV? Was it something that was out of character? Was it a grave mistake of some kind?
Pointing out errors is ok and will help you to improve but a Beta who will really dig in and give you a problem backed up with reasons is the best kind you can find.
I'm certainly not saying I am a great Beta, but I keep this in mind when I am asked to read.
So remember, lots of Beta's are great find as many as you can to help improve your work.
If you are asked to be one, remember to be a great one and back up all of your nits with good reasons.