For the most part, unless you're a programming grunt and do nothing except hack code all day long, you're multi-tasking. Email, IM, a work order system, CVS system, perhaps ERP, CRM, DMS, etc. Any number of systems that may require constant or frequent monitoring. That is where developers (and most other computer jockeys) need a 2nd monitor.
Now...if you're lucky enough to be able to say, "Look, I'm coding this afternoon and I'll be unavailable entirely until I get done," and then you can close everything, open up your project, and hack/slash at it for a few hours interrupt-free, that's wonderful, and you probably only need one monitor. But I don't know of too many positions like that these days, where so many people are called to be Jack-of-all in most positions.
In the end, monitors are bloody cheap. If the developer wants one, GET HIM/HER ONE. The cost is extremely minor compared to the value it'll bring to their attitude if they think their needs are being met. It'll pay for itself easily.