The "old" days of 13-inch monochrome monitors is long gone. Monitors are now light, flat, and cheap. Having to make do with a single monitor, especially a small one, is silly, considering how much a dial monitor setup can save in productivity. Compared to salaries, the pay-back of a dual monitor upgrade is huge. Consider that a typical 24-inch widescreen monitor costs about $250 retail these days. Add in a dual-head display card (if one is not already in the box) and you add another $100. Total cost for a dual-head setup is between $500 and $600 over a typical three-year lifespan, so let's call that $200 a year in actual cost to the company. Consider also that the average developer in Canada makes about $35 an hour (not counting benefits and using a typical developer number from salary surveys across the country). To pay back the $200 a year cost of the dual-monitor setup, the typical developer would need to save an average of six hours a year in productivity. Rounding and doing some math, that's about 2 minutes a day that needs to be recovered to repay the dual-monitor setup.
So how realistic is it to save two minutes a day by using two monitors? In my years as a developer, I loved having two monitors: one displayed my editor and the other my source code control system as well as debug information. Swapping these up and down on a single monitor was frustrating. As a tester, I would have the executable in one window and the test case management system open in another. As a manager, I keep Outlook open in one window with my IM clients (so I can be interrupted non-stop) and the other monitor contains the "work" I do. Again, if I had one monitor, I'd miss something. Simply swapping apps up and down from the task bar would consume a heck of a lot more than two minutes a day! Not to mention the overall frustration factor.
In real world situations, I've deployed dual-monitor setups at several companies that lacked them before. In every case, developer and tester happiness went up, noticeably. Anecdotal evidence indicates the teams were much happier with two monitors, and all felt they experienced productivity improvements. The morale issue alone was worth the investment, but the productivity improvements justified the expenses many times over.
So, I'm always a little disappointed when companies I work with complain about the cost of providing two monitors to people. The payback is huge (amortize the costs over two or more years and the numbers become insignificant). People work better when they are happy. Two monitors has always made people happier and more productive. Going back to one monitor (even a laptop screen) is annoying for me.
In the end, if I have my way, everyone in the company gets dual monitors. The change for everyone is dramatic and always appreciated. And the productivity gains in the technical teams always justify the change. Fortunately, dual-monitor setups are getting more common today, but they are still not common enough.