Folding to a re-raise pre-flop is sometimes just the right, smart thing to do. If I'm playing cash games, I will usually fold if I raised with KQs or similar hands 3xBB and I get a re-raise of 6xBB or 8xBB. Clearly the guy is pushing either KK or AA or even JJ. If it's a loose player then I'll call, but if it's someone who hasn't played for the last 20 hands and is all of a sudden re-raising pre-flop my spidey sense starts and I will just throw away the cards. But it really depends on several other factors, most importantly: stack size (the larger the more I will tend to call re-raises); position and number of players involved.
Note: In cash games it's easier to lay down a re-raise because there are no antes to steal so chances that someone is just re-raising for the fun of it doesn't make that much sense to me. (Unless it's short stack who's trying to pick up some blinds for a few more rounds of play).
In late-stage tournaments, things can get out of control pretty quickly. Check out pokerstars
.tv broadcast of the apr 2 6-max nlhe game. eastgate and moorman1 were both in it.
I don't remember the exact players but p1 raised 6xBB UTG; everyone folds except for the button who reraises 10xBB; p1 re-raises to 18xBB and the button goes 24x. P1 then just goes all-in and shows QQ, only to realize that he was up against AA. Aces won and p1 was sent home packing.
Moral of the story: unless you have the absolute nuts pre-flop (AA) I wouldn't feel comfortable re-raising, then re-re-raising then going all-in with any other hand. Granted it's very tough to fold QQ but why go all-in? I would have called the button's re-raise because I had a hand, and I want to see the flop. If the flop is friendly (low cards, no overcards, or if I make a set) then I'm going to explode and go gangbusters on my opponent. But if I miss then I'll just pull in my horns and live to fight another day. Better than kissing your tournament goodbye after 9hrs of play. Oh, and did I mention that p1 was 3 positions from being ITM.