Multiple or Single WordPress Installations


I have been using wordPress for two of my sites and this never occur to me until now and I’m wondering what would be the most appropriate thing to do.

What I have been doing is this. I installed wordpress locally using MAMP and under the same installation I add my themes for different sites but I was thinking and what if I want a certain site to have different functionality in other words a plug-in used in one site may not be what I want for multiple sites, so my question is…

Do you install wordPress for each site so you have control over you plug-ins or you simply do what I have been doing putting everything under one installation?

Also installing multiple versions of WP shouldn’t be a problem right?

Thanks a lot.