I have my mb on front of me, using the built in screen and keyboard (with an external bluetooth mouse), then a 19" monitor sitting just above the mb, run dual screen.
This way I have two screens worth of space to work with, plus the usual spaces. At the moment for example I have safari fullscreen on the external monitor, and secondary windows like adium running in the mb screen - this way gives me a big main screen, while still keeping some less visually orientated but still important screens available.
Moving to photo work, I can have a photo open on the large screen, with the smaller screen hosting the main software and thumbnails so I can easily flick back and forth between chosen images.
The same idea could be setup for countless applications depending on what you use, word processing on the main screen while keeping email open in the lower, keeping reference documents or chat windows open while typing out work or any other combination.
Add in spaces and you have a pretty versatile setup - I can have safari/adium open in one pairing, then itunes open in a separate window I can flick to if I want to change the music, and photo software open in another so I can flick between internet/chat and photo based work.