I find that I am most productive when I have 2 or 3 projects at a time to work on. There’s something about being able to jump back and forth when the mood strikes that increases my productivity (it may only feel that way though as study after study shows this feeling to be false). I feel better working this way and that’s all that I know.
Over at TheNextWeb they ran an article called “The Importance of the Side Project.” It covers a lot of different ground but to me the take away was that side projects give you a new perspective on whatever else you are working on. Google turned their 20% time initiative (essentially mandatory side projects) into some of their biggest revenue services. Side projects don’t have to be small.
The subconscious is an amazing thing. While you sit working on one thing it is off doing something else entirely. Eventually it may spit out a fully developed concept. But first you have to feed it with something to work on.