I have multiple workspaces where each workspace is dedicated to a "project", with the term "project" being used in its loosest sense (not in the Eclipse sense). For example, one of my "projects" is the
JBoss in Action project where I maintain the source code for the book. Thus I have a workspace dedicated to it with each chapter of the book being an Eclipse project. No other work is done in that workspace. I also maintain a separate workspace for each "project" at work, usually because each such project requires its own configuration settings.
I also have multiple installations of Eclipse, some of which are dedicated to specific projects. I usually do this if the project has certain requirements, such as plugins, which I prefer to keep isolated. For example, I have a separate Eclipse installation for each book I review, and each has a dedicated workspace.
But it really comes down to your preferences and how you like to work. This system works for me but might not work for someone else.