I believe having multiple monitors, especially for software development, is very helpful. Not only can it aid debugging graphic applications (CAD/CAM, etc...), but it also helps when using a new API. I will have the documentation on one monitor and the IDE on another.
I once had a manager who believed that the developers should have the oldest and slowest computers. He thought that having slow hardware would force the developers to write faster code. It only served to frustrate us and we ended up wasting huge amounts of time during build cycles.
While, when I was writing code, I always WANTED the fastest hardware, I do not believe it i necessary, but developers should get the necessary tools because, as previously stated by others here, developers are expensive and small up-front investments in processors, memory, monitors, etc... that make them more productive pay great dividends in delivery of new features and bug fixes.