I read about these a while back. I forget the exact explanations of all of them, but the general consensus was to either use demand or interactive.
I *think*, but don't trust this part at all, that the demand would make it faster but use more battery and the interactive would be a bit slower but better battery. Like I said though, idk about this.
What governors you have available depends on your kernel and they all work a little differently. Basically they control how the clock rate changes between the minimum and maximum that you specify with setcpu. Some that are pretty common:
Performance keeps it at max; really people only user that on mobile devices to get high benchmark scores. On demand will keep it low until a threshold load is reached, then it will speed up. There's usually another that will scale up in steps based on threshold settings called user or interactive, depending on the kernel. That will save battery but cause some lag while the processor speeds up. Smartass automatically adjusts based on load and system state; i.e., it will slow it down if the screen is off. You're generally safe using on demand. If you have smartass it's great, but only some kernels on some devices have it.
Play with different governor settings and clock speeds until you find the best performance and battery life for your preference and device. I'd suggest not selecting set on boot in setcpu until you've found a setting and run it for a good while to know it's stable. Monkeying with the governor and clock speed can cause instability and even reboots. It won't do any actual damage, but if your phone reboots you want to be able to change that setting. If it's setting on boot you might never be able to before it restarts again.
