I'd highly recommend going for a multi monitor setup. When I was first introduced to dual screen in about 2005 I was pretty skeptical, but after a day or so I started to get why people like it. It's incredibly useful for programming activities - you can learn from one screen, and implement on the other, or you implement on one and test on the other. Or pretend to work on one or play games / read news / post on forums on the other. It is also great for big copy and paste jobs where you're plucking bits of info from one document and then pasting them into another.
With the price of flat screens these days it isn't all that expensive either. Round about 2003 I spent about £500 on a 19" Sony trinitron that weighed about 35kg - thinking that with that quality, I'd be using it for years. I finally got rid of the brute 3 years back and replaced it with a 20" Samsung LCD that cost me £200, Then last year I added the 24" Samsung that was a steal at £230 - the 2 screens combined cost less and take up less space than the old one.
My other half doesn't yet appreciate the value of the second screen much. But she does play some games on the PC (the sims etc) and I sold her on the idea of upgrading the main monitor, then added that it would be a shame to throw out the old one. But I'm finding now that if I have to work from home some evenings, we can sit together and watch a tv show on the second screen while i'm working on the main.
A couple of things I've found: i) it works best when the 2 screens are the same vertical height ii) because you'll start having more windows open at the same time, you'll need at least 2gb ram.
TBH I don't think there's much of a gain in usefulness when you start going from 2 to 3+ monitors - in fact it starts becoming a bit hard to manage, the 3rd can be handy if you spend a lot of time on a remote desktop. At an old job I got into an arms race with a colleague - unfortunately he played a good long game and got put in charge of it purchasing, so it ended in a 3 screens to 4 defeat, I think he only used the 4th screen for playing Settlers from Catan.