"Judge not, lest ye be judged!" These words of Jesus are often hurled at those who hold to a traditional morality and confess Christ as their savior. Anyone who believes in Jesus must obviously never judge anyone about anything at any time.
This, however, is not possible. Jesus Himself makes judgments, rather harsh judgements at times. Saint Paul tells the Corinthian congregation to judge those inside the Church. And Jesus does not give men and women license to live however they please. He calls them from their sin-filled lives and into fellowship with Himself.
The point Jesus is trying to make in Matthew 7 is that we should hold others to the same standard to which we hold ourselves. As Christians this means we should be encouraged to call others to repentance when they sin against us. I certainly would want someone to point out my sins rather than let them go unchecked (as unpleasant of an experience as that might be).
If no one is ever judged then no one is called to repent. If no one is called to repent then no one is forgiven. And if there is no forgiveness there is only judgment before the throne of God, and that will be far less pleasant than being judged by your friends or family here on earth.