Put It In a Space
I was first introduced to virtual desktops about 6 years ago when I first started poking at Linux. At the time it was a hobby type thing so I was basically running one or two applications at a time, and I didn’t see any real practical use for it.
In the last 9 months I’ve been buried in a major software implementation at work, and I’ve been consistently running more applications than I previously had. My dual-monitor setup started to seem too cramped, and seeing that I am running Mac OS 10.5 (the Leopard), I decided to take a stab at Spaces, and man I’ve been happy with the results. I’ve settled on a 4-desktop arrangement.

Space 1 (top left): Being the “first” desktop, I’ve got my two main applications there, email (Entourage) and web browser (Firefox).
Space 2 (top right): Second most desktop I’ve got my various IM clients. I use iChat and Skype primarily, but will dip into Adium on occasion.
Space 3 (bottom left): This is where I do most of my interchange of applications. Shown in the photo is TweetDeck, and I will also pull up Terminal, TextWrangler, Finder, Excel, Word, etc. as I need. This tends to be my catch-all space.
Space 4 (bottom right): Primarily my remote desktop desktop. I use CoRD to connect to Windows servers and computers. If I am not using a remote desktop there I’ll shift some stuff over from Space 3.
Here are some free Windows options for running virtual desktops if you’ve never tried it out: Vista/XP Virtual Desktop Manager, VirtuaWin, Microsoft PowerToys.
Do you use virtual desktops? How do you have it arranged?
Update: I realize I talked about my dual-monitor setup, and this screenshot was taken when I was not at my desk.