This question seems to be a FAQ and SlashDot. Here is an approximation of what I posted last time. It is/was the actual policy at a Fortune 500 technology company during a time when I was the PHB that had to pay for the 24x7 coverage on a particular server.
For your 40 hrs/week, you get your regular pay. For your time "on the pager", you get 25% of your regular hourly, until such time as it goes off. From the time the pager goes off, until you clear the trouble ticket, you get 100% plus any applicable shift/holiday/overtime premium.
If you can dial in remotely and fix the problem, great for everyone. If not, you must be able to get from wherever you are to the server room in 30 minutes. 100% of the time you are on the pager, you must be in condition to work, ie: sober.
So... does that sound like getting paid 25% for doing nothing? Not to me. You can't get more than a 30 minute drive from the plant -- so no ski trips for you that weekend. Going to a party? Better have cranberry juice. You are getting paid for making yourself available.
My company had a policy that the cost of 24x7 coverage came out of the budget of the PHB demanding it. A very good policy, IMHO. Its too easy to ask for it otherwise, without considering the consequences, both in terms of dollar cost, and in terms of quality of life for the employees that provide the coverage.