Dual monitors on separate video cards is how I like it. I run a dual LCDs at my office (19" Sceptre and a 17" Hyundai) with 2 nVidia cards, and dual CRTs at home (19" Cybervision and 17 inch AOC) with an ATI Radeon 7500 All-in-wonder and an nVidia GeForce 440.
The company I used to work for got me hooked on the duals - editing graphics in Photoshop with all the tools on the right monitor and the workspace on the left was hard to resist. Also did a lot of Access work - could open 2 instances of Access at once, and copy and paste between them. Or open up a wide Excel file across 2 screens - no horizontal scrolling.
Two monitors at different resolutions also helps when checking a website layout, or you can open the same site simultaneously in Firefox and IE to see differences. But as mentioned by others, for web development it is really great to have your code on one screen and view the results on another.
Anyone who doubts the productivity increase realized by using dual monitors is a fool. No, dual monitors are not necessary, but they are definitely more efficient.