I do a little bit of all of the above.
I still use my 12" 1.5 GHz G4 running Tiger for 80% of my personal computing, but the growing lack of support for Tiger, particularly by third party vendors, has me thinking that I will soon update it permanently to Leopard, obviously dropping Apple's Classic environment at that point. Fortunately, my use of Classic has been plummeting over the past couple of years.
For really old MacOS software, I mostly use my SE/30 running MacOS 7.5.5, or I use
Mini vMac
on current hardware to emulate a Mac Plus running MacOS 6.08. Mini vMac is actively maintained, and the developer says that a version capable of emulating a Mac II is on the way. Mini vMac has been ported to a lot of platforms, and it's definitely worth a look for preserving access to Mac Plus era software.
I have a Powerbook Duo 270c running OS 7.1.1 and a Duo 2300c running OS 8.6, but I rarely fire them up. The Duos are tiny enough that they are never in the way. I also have a nicely tricked out PowerBook 1400c (dock, RAM upgrade, external video card, all by NewerTech, and PCMCIA ethernet and modem), which IIRC is configured to dual boot OS 8.6 and 9.1.
As I will likely move either to Leopard or finally migrate fulltime to my MacBook Pro, the idea of running SheepShaver to maintain access to Classic apps has a lot of appeal. I've only tinkered with it so far, so I can't comment on how good or bad it is for routine use. I haven't tried Basilisk recently, but that's only because I haven't had time, not because of its quality.