I play with mixed settings on both my systems.
Things I have maxed are Textures, Objects, Particles, Effects and Shaders.
Things I have on low are Shadows, Physics, Water, Postprocessing, and Sound.
No AA.
This way I get everything looking gorgeous without the crap that I don't see/notice very often extremely low.
Two systems are:
Desktop
Phenom2 x4 BE (4-core) @ 3.4ghz
1GB GTX285 (1920x1080 @ 24in)
8GB DDR2 800
10k RPM Velociraptor HDD
Onboard Sound
Laptop
Mobile i7 x4 (8-core) @ 2.6ghz
Mobile 1GB 5870 (1680x1050 @ 18in)
6GB DDR3 1333
7200RPM HDD
Onboard Sound