There's lots of arguments for using multiple monitors, for the past 4 years I've had upto 7monitors at one point and have scaled back to 5. It really is all about screen real estate. As a developer, the more monitors I have, the easier it becomes to be productive at multitasking.
Working as an e-commerce developer, this is how I typically manage the monitors.
One monitor dedicated to email.
One monitor shared between Tailing log files and file manager, I find it's easiest to share if both windows have maximized height, but 90% width, and one aligned to the left of the screen the other to the right, so I can easily "select" between the two, at the same time not requiring any additional actions to bring one window forwards.
One monitor dedicated for a browser, usually front and center
One monitor dedicated for the code editor of choice
Finally one monitor to collect misc items, which may include IM client, emails I am composing, music player, perhaps even another browser for compatibility or for coding reference. This monitor is usually on the far end of the setup of monitors.
Here's a shot of my current setup: http://twitpic.com/1uv28l
The stacked monitor is on a different machine than the other 5.