According to a recent article in Scientific American by Carol Dweck, which summarizes research in the area, praising people for talent or intelligence is counterproductive. This is contrary to widespread belief.
Such praise encourages people to adopt a "fixed mind-set" — to believe that success is the result of innate, fixed qualities (talent or intelligence). Under this model, failure is the result of things which cannot be changed, so it is permanent and any further effort is pointless: this mind-set facilitates learned helplessness.
On the other hand, encouraging people to have a "growth mind-set" — to believe that success is the result of qualities which can be developed and improved, leads people to have a different model of failure — that it is temporary and can be converted to success with the application of additional effort. Such encouragement could take the form of praise for successful hard work or teaching how the brain works.
Talent doesn’t lead to success: hard work, perhaps with the assistance of talent, does.