I use my MBP in that style (lid closed usually) and the ability to occasionally "break out" of my workspace is invaluable.

What make/size monitor do you use?

Am I right in saying that the secondary monitor with remain at the same resolution as the MacBook (1280x800) thus everything will look massive? I'm considering getting a monitor for my MacBook but need a decent chair first!

Extended desktop and video mirroring: Simultaneously supports full native resolution on the built-in display and up to 1920 by 1200 pixels on an external display, both at millions of colors

From - http://support.apple.com/kb/SP5

That is seriously awesome! Thanks.

Only a 19" (at 1280x1024) - but I could use bigger if I wanted to spend the money.

That would depend how you want to use it. If you were me then an iMac would make a nice table ornament, but I'd end up buying another Macbook because, discounting the portability aspect, I like using laptops sat on the arm of my chair. I sit behind a desk at work enough as it is. I really don't want to be stuck behind (or in front of) one at home.

Of course, you could go buy the iMac then buy a (spit, ding) Dell Mini 9 or MSI Wind and use it as a Hackintosh Netbook.

In reply to a post by fetler:

95% of the time, the other 5% being in bed where it has the potential to get damaged if I fall asleep (as happened to a friend recently)

Let's see if I have got that right.
During 5% of the time you were in bed and as a result of you falling asleep your friend was damaged?
Surprised you have any friends in bed, if that happens!
[just my weak attempt at humour].

QUOTE
Reasons why:
* My MacBook is a year old and out of warranty
END QUOTE

For next purchase you could consider using John Lewis who provide free 2 year warranty on Apple laptops and desktops.

http://www.johnlewis.com/Technology/Laptops/Laptops/...

http://www.johnlewis.com/Technology/Desktops/Desktop...

My wife's G4 iBook [ plastic case, of course ] from JL gave 2 years trouble free service and then the guarantee was extended for a further 3 years for GBP 169.00 and then for a further year for GBP 29.00 which seemed reasonable.
No problems to date, since purchase in early 2004.

My own G4 iMac from JL had hard drive fail just before end of 2 years service, new hard drive was fitted by JL . Paid [forgotten how much] for extended warranty for a further 3 years.
Just the one failure since purchase in early 2002.
Keeping my fingers crossed now.

The longish guarantees from JL provide some peace of mind for users who do not wish to keep changing to the latest model.
It could be argued that because the machines have been reliable the insurance money was largely wasted, but it has avoided the worry of big repair bills.
Of course, the above relates to Apple equipment bought in 2002 and 2004.
Purchases in 2009 may be different.