Another banner denounced the $11,000 monthly salary -- before benefits -- that Iraqi MPs approved for themselves.
Prime Minister Nuri al-Maliki called the protesters' demands "real," and urged officials to address them.
Groups called "No Silence," "Baghdad Is Not Kandahar" and "Blue Revolution" organised the event, and used Facebook to organise the demonstration which took place in a light-hearted atmosphere to preserve its Valentine spirit.
"We gathered for the sake of Iraq, Iraq of love and peace," said Manar Izz al-Deen, one of the organisers.
"We chose this day because it is Valentine's Day. We decided to share our love for Iraq," she added.
"We want to live this love, but our love is filled with sorrow because we lack many things," said Izz al-Deen, a political science student at Baghdad's Mustansiriyah University, who carried a red rose.
"We will continue demonstrations and organise more protests if the government does not fulfil our just demands," she added.
Protests over irregular deliveries of food rations for the poor and lack of basic services such as electricity have sparked protests around Iraq that have multiplied since uprisings toppled entrenched dictatorships in Tunisia and Egypt.
Journalist Balqees Kawoosh, another of the protest organisers, said Valentine's Day was not only for lovers, and that protesters wanted to show their love for Baghdad.
"Stop the theft, the negligence, stop sleeping -- the officials have slept enough," said Kawoosh, lashing out at leaders she said were complacent and uncaring about the people's plight.
"I don't think we will be more patient. We don't want to change the leader, we only want amendments, reforms. We want them to fulfil their promises," she said, dressed in red.
Ziyad al-Ajeeli, director of the Journalism Freedom Observatory, said the demonstration was a clear message that officials must repair basic services and improve security.
"All aspects of life in Iraq are bad," he said, adding that some officials in provincial councils were suppressing freedoms and encouraging Islamic extremism.
"The youth today are becoming more aware of themselves and can govern themselves and raise slogans rejecting these trends," said Ajeeli, who joined the protest.
Karnas Ali, the organiser of "No Silence," said the protesters' demands were that Maliki punish corrupt officials.
"Our goal is not to change the government. We only want reforms," he said.
The watchdog Transparency International rates Iraq as the world's fourth-most corrupt country, with diplomats and local officials often citing widespread graft as a major obstacle to post-war reconstruction and development.
Maliki said he was not opposed to protests.
"Protesting is a right guaranteed by the constitution, and I ordered the security forces to protect them (the demonstrators)," the premier said in a meeting with local officials.
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