Jay Porter sums it up in Slate:
Porter's not just speaking abstractly. He ran a restaurant where he abolished tipping. The result, he writes, was that the food improved, the service improved, and everyone made more money. Here's more on the subject from Slate's Brian Palmer.
Now, if you're not having customers pay waiters in tips, you have to actually pay them real salaries. This might sound shocking, but as Porter notes, it's the norm in pretty much every other profession, and it seems to work pretty well.