how much can the value of my home drop before it is wise to let it foreclose?

You should explore any other options you may have before letting your home get foreclosed on. I am assuming that you owe more on the house than it is currently worth, if this is the case you should consider these options first:

Try to get a loan modification done that may reduce your interest payments and possibly your principal balance. Check on the link below.

http://makinghomeaffordable.gov/

Hire a good agent to help you do a "Short Sale" on your property or do a deed-in-lieu of foreclosure. Check on this link:

http://makinghomeaffordable.gov/hafa.html

Hope this helps.