This depends entirely on your needs.
People who work with large graphical images prefer the large monitor.
Some prefer a single desktop with a resolution of 1600x1200.
People who watch movies on their LCD prefer the widescreen.
Some software developers use two 17" LCD's wherein the screen on the right is twisted 90 degrees so that its height is greater than its width.
Discover your need and then strive to fulfill that need. Otherwise you may spend money and still be unsatisfied afterwards.
EDIT:
To strictly answer your question, my preference is for the multiple monitor setup of 1600x1200 LCDs. These are cheaper than quality monitors have historically cost and they use less power than a single large screen. Additionally, if one LCD panel breaks within a few years, it may be cheaper to repair/replace that single panel than to repair/replace a larger panel.
Samsung's introduction of the 20.1" LCD with 1600x1200 resolution at 36Watts for $350 has provided me with the impression this should now become the standard monitor for most uses.