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Normally I would use one HDD then partition it into two drives, with C:\ mainly used for OS and D:\ for gaming and misc non-essential programs.
For a mechanical drive, this is a pretty good & standard strategy under Windows. I've used it a lot over the years and it (maybe) provides a slight efficiency tweak.
I usually do it this way, a slightly modified version of what you describe:
Baddest fastest hard drive I've got
will be placed into the Primary position, whatever that may be for your system specs.
However, the initial install will be to a different drive.
Install OS, and get it fully patched & tweaked all by itself with the minimum possible other software installed ....
but to a different drive first, rather than the best one you will use when the build is finished.
There are some variables you need to deal with, such as 32-bit or 64-bit OS, how much RAM, what type of drive, how large the drive, what your software needs are vs. your gaming needs, including size of installs and required resources.
I'll assume something modern like this: Win 64-bit, 8 GB RAM, SATA III drive of 500 GB, games priority and "other" non-video-editing software.
Once the OS is fully on my "anydrive," and nothing else is yet installed, I clone it with Acronis to the baddest fastest drive I've got. During the clone process, I make a small space at the front of the drive (the fastest zone), followed by the OS partition, and then (possibly) leave the end of the drive for another partition. The space at the front varies, and is dependent on amount of RAM, because this will be dedicated for use by my system cache.
So, under WinXP that cannot use more than 4 GB RAM, my system cache will be about 8 GB max and the front space will be a small partition of 9 or 10 GB. If Win 7 with 8 GB RAM, then cache partition should hold twice that plus a couple percent, so about 17 GB or slightly less is plenty. This ensures your system cache is not fragmented and doesn't compete with anything in its dedicated playground. Then the second partition houses my OS and has enough room for my most resource/disk access intensive applications.
For WinXP, that can be as little as 20 or 30 GB (I even have one stripped system right now with everything on a 10 GB partition), but I find ~120 covers all my needs ... yours may vary. Of course, Win7 needs 20 GB minimum, and it's probably a safe bet to reserve 45 GB formatted space for the OS alone. That leaves at least ~70 GB for your most resource-intensive software.
After the clone, boot to your C:\ and format the extra partition(s). My cache drive is usually assigned as the X:\ drive so it doesn't interfere with anything else. Your C:\ either already takes up the remainder of the drive or there is space at the end to format a D:\ So, for example, one of my main mechanical drives (WinXP) is cut up like this with 8 GB at the front (X:\ cache) and 25 GB next (C:\ system) and the remainder is ~665 GB (D:\ data) on a 750 GB HDD. This was a bit of a mistake: if I did it again today, it would be 8, ~135 and ~555 respectively, but when I did it I had no need for apps ... it was dedicated for torrenting.
The end of the disk D:\ I usually store data on only, no apps, or maybe use it as a scratch disk for something like Photoshop. On that computer, I now use a second physical hard drive as follows:
Now, assuming have a second drive, which we also hope is SATA III and 500 or 750 GB minimum, I can partition it with ~120 GB at the front, or maybe 180. This space reserved for applications that require fast disk access, and also good for Photoshop scratch drivespace, etc. Of course you can make adjustments for your personal needs, but those first 150 to 180 GB at the front of your drives are the premium, speed-intensive locations for your most demanding apps. Everything else can be used for data storage and lower level apps.
I learned to stop arguing with microsoft products ... they are most happy when installed on the same C:\ partition as the OS. So I usually let them. The MS Office suite does usually lend itself to installation on another partition, so I usually do that much and save a handfull of GB on my premium spaces, but most of the rest isn't worth the headache.
If you do fairly intense video editing/rendering or large-ish Photoshop stuff, your premium spaces are probably worth it. If your Photoshop work is more casual, place it on the D:\ partition ... it really doesn't require premium speed, although the scratch drive assigned could be one of your premium locations if you handle multi-GB files.
Now with the advent of SSDs should I still follow the same setup style [...] I'm thinking it'll be a lot more expensive to buy a giant SSD than two smaller ones.
No. SSDs change everything. There is no longer a premium location ... it's all pretty much the same speed. You tend to take a performance hit when it reaches or exceeds 90% filled up, so just pay attention to keeping an empty reserve. No need to worry about cache fragmenting, it won't affect performance. No need to defrag, it won't seriously affect performance, and Win7 + modern SSD does a good job of keeping fragmentation down to a minimum.
Your definition of "giant" is important here. The current sweet spot for price-per-GB on SSDs is right around 120 & 128 GB drives. I've seen them as low as $95 on special and with rebates. That price is untouchable in other sizes.
Also, the brand you invest in is important. Samsung, Intel, Patriot and a couple others that I can't remember right now are more expensive, but also more reliable and faster. You need to shop these carefully. Avoid Corsair, Kingston and OCZ right now ... they have been really unstable. Some people they work flawlessly, but they also have a much higher failure and trouble rate than many others. Right now.
If you're really into speed, consider a pair of Intel 128 GB in a RAID 0. You will achieve throughput rates around 1000 MB/sec ... that is 1 gigabyte (not gigabit) per second. Something like this
SAMSUNG 830 Series would be a really good bet for such a configuration.
Format that all up as one perfect partition and install OS plus premium apps. Use a fast mechanical drive (or third single SSD) for other apps. Again, if a mechanical drive, format a partition at the front of it about 120 to 180 GB and reserve for apps & scratch disks, use the remainder as one large partition for data storage.
DO NOT use a green technology mass storage drive to run apps off, like the Western Digital Green 2 TB series or something. Use something serious like a WD Caviar Black or somesuch that is designed for intensive and constant disk access/writes.
where do you guys put your browser? Is that a non-essential program or does it get grouped together with the OS drive?
Completely non-essential. Well, unless you run several sessions and browsers at once with 20 or 50 tabs open all the time. Even then, still shouldn't need you most premium space. Reserve that for your top end games, after the OS. However, browsers take up so little space that you shouldn't even notice the install on your hard drive footprint, no matter where you put them ... so it really doesn't matter.
