When to carry/wear a Short Sleeve shirt?

A short-sleeve base and a long-sleeve hiking shirt is a great combo indeed. It's what the military uses. A long-sleeve base is slightly more versitile since you can just push up the sleeves.

I always wore a short sleeve shirt while hiking in the Appalachians in the summertime.

I'll echo what others have said above that short sleeves are best for warm and humid climates where you will usually have some kind of shade from tree cover.

i wear short sleeve all summer. my hiking is done in the green tunnel of the AT, so i'm not worried at all about the sun. i personally think the "bugs" thing is overrated, at least in PA. mosquitos don't ever become a bother until i get to camp and am sitting still, in which case i can either build a fire or put on a windshirt/rain jacket. the bugs that are the most annoying are gnats that fly in my face when i'm walking down the trail. long sleeve shirt won't do anything for them…

The only reason I ever pack a SS shirt is as a warm weather sleep layer.

Ticks are a huge issue, especially in the spring and summer, in the SoCal backcountry. I detest the little buggers. So unless I'm on a front country trail, I virtually always hike in pants and long sleeves regardless of the temps.