Or does it in fact make us worse people?
What does it mean to be "better" or "worse" as a person?
Are we better people for believing in sin and judging people for their thoughts and actions?
Everyone judges, whether religious or not; it is not in the job description only of the religious.
Surely the difference, if that is what you are looking for, is in how one establishes that which to judge by.
Are we better people denying ourselves pleasure and self-fulfillment for the sake of meriting some afterlife reward?
Do all/any religions do that? Some do, for the most austere, but only if judged from the outside. Who are we to understand what motivates those individuals.
And surely even non-religious forgo pleasure and self-fulfilment in seeking the longer term goal. If religion pushes the length of that term beyond death, does that invalidate the process? "No pain, no gain" and all that malarkey.

[Qupte]Are we better people for believing based on authority and tradition rather than on reason and evidence? [/quote]Someone else has already pointed out the false dichotomy presented here.
If you are religious, how has religion made YOU better? If you are atheist or agnostic how would it have made you worse?
I am an agnostic atheist. Staying within my flavour of religion would have made me miserable, the way staying within a loveless marriage makes people miserable: you can still respect and appreciate the other but at the very core there is a fundamental difference that can not seemingly be overcome. Perhaps if you stay too long you come to resent the other.
As it is, I can not make myself believe... it will require something I can't imagine to convince me to believe. And to have stayed in an environment where such belief is a requisite would have made me miserable, if not overtly physically, at least intellectually.
Yet my immediate family are religious. Are they"better" or "worse" people as a result? I might not agree with all their choices, but is that not always the case?