I use 3 monitors (2-30" and 1-27"). I've become so accustomed to this configuration that trying to work on anything less can actually be a hinderance. Although, it's not crippling by any means. I simply work slower with two monitors and even slower still with a single screen. I'm a Mac user, and I do not use the application frame Adobe implemented in recent versions. So I can view my desktop behind any window and merely click to switch applications.
How I use them....
Right monitor holds panels. Every necessary panel for any application is open and available on the right monitor. I spend very little time looking for anything in terms of panel use or commands. I've grown accustomed to my workspaces and immediately know where to go to use something.
Center monitor is the work area. This is where all documents open and the actual clicking dragging and painting take place.
This is how I would also utilize two monitors. Panels on the right, work area directly in front of me. With a two monitor configuration, I find placing the primary screen directly in front of you, as it it were the only screen, is best. Then place the secondary monitor off to the left or right side depending upon if you are left or right handed.
My third monitor on the left is used for viewing or reference. A client sends me something I need to view while I work in a document. An example would be a PDF with corrections commented in it. I open the PDF on the left monitor and the actual document in the center monitor. This allows me to see the comment while I work.
As Brenden pointed out, the multiple monitors is very helpful with web design as well. Code front and center, browser windows left and right and refreshed as needed.
I also run Parallels on the Mac for Windows as well. I can place a Windows running virtual machine on the left monitor while I continue to do Mac-oriented tasks on the other two monitors. This gives be one screen for a completely different OS when needed.
There's a huge ease advantage when you can see all the panels in any application (especially the Adobe apps) since often while working you're switching from panel to panel to complete something. Seeing all your tools simply makes it very easy to grab the one you need.
I can not imagine a work area with less than two screens given how panel-centric the Adobe apps are anymore. Even using a single 30" monitor I find I really want more real estate to push the less important items out of the way and focus on the working document.