Scott Hanselman raves about the productivity increase he has found using a dual monitor setup. I can definitely vouch for those claims. I've been using a dual monitor setup for my home PC since 1998. It is a tremendous benefit to be able to have multiple windows open simultaneously and have them spread across more than one monitor. For instance, check out my standard dual monitor VS.NET setup:

Or, if you ever need to see your code and the design view both at the same time, just expand VS.NET across to your other monitor (thanks to Ultramon!):

Now, if you can swing it, three monitors are definitely the ultimate productivity tool. Just imagine the screenshots above with another monitor to the left. On the third monitor, you could be looking at a code example, watching for new emails, or running the application while you use the other two monitors to debug. Oh, yea.... ;-)
Darrell Norton has promised to put together some facts that he gathered while monitoring the productivity increase from multiple monitors on one of our previous projects. Maybe after he reads this he will feel motivated to put them up!
Tip --
If you are using Windows XP on a laptop and have an extra monitor, you can easily enable a dual monitor configuration. You just need to configure your BIOS to enable your external monitor while your laptop display is active. Then, in the Display Settings utility, alll you have to do is enable the second monitor! For Windows XP desktops and Windows 2000 machines, you will need to add a seperate PCI graphics card for each additional monitor you want to use.