I have one of those retractable cord thingies on my belt that has my work ID/keycard attached. I attach my Arc-AAA and Photon II on the keycard hoop, stuff my E2 in my pocket, and I'm set.
Why LED? For me, it's ultimately about its awesome size/output ratio, and excellent battery life. Since I'm a city kid, I really don't *need* to use LED's, but I definitely feel the benefit of using them every day!
Arc-AAA:
I agree with sflate -- the thing is awesome in the server room. Server rooms tend to be well-lit, but a good output is required to confidently shine the dark spots -- the Arc-AAA delivers. Also, the awesome grip it provides should not be underestimated. Many LED lights have smooth cases, and when you're hanging upside-down with your head through an rack full of servers, you really... no, REALLY don't want to drop your light source. I've tried many times to use a Photon II for my needs in the server room. Its non-grippy surface made it difficult to aim, its size made it scary to hold with my mouth...gulp..., and if the battery went out, that meant a 5-minute downtime. For the Arc-AAA, battery life, cost, and the easy-swap-battery capability is super. Could I use a MAG AAA? Actually, no. When I'm trying to untangle cables, the last thing I need is to worry about the stpuid light 'rings' that focusable flashlights produce. I need a consistent beam. The Arc-AAA is my friend in the server room.
Photon II:
When I need light, and I need it FAST, nothing (well, at least for me) beats the Photon II. More often than not, I'm headed towards a dark area while I'm carrying a crapload of parts or groceries. Whenever I step into a dark network closet, my garage, or simply have the California ISO turn the power off on me, I need to be able to turn on my flashlight with not just one hand, but if possible, with one/two finger(s) -- and quick. The quick-squeeze light of the Photon II is unbeatable in that situation. In such situations, battery life is not a concern, as I only need the light for a few seconds as I make my way through. However, size matters in this case, and as far as I know, there aren't any non-LED flashlights smaller than the Photon II.
So... the keycard + Arc-AAA + Photon II gets the job done at home and at work -- even for a city dweller like me.
As for your original question of backpacking... I've found that LED lights are great for their long run-time in close quarters, but really leave something to be desired for semi-long-range use when hitting the trails. It's my opinion that you pretty much need a 10LED+ cluster if you expect to see beyond 40 yards. At that point, you've gained a ton of bulk, but your wallet will be lighter, to make up for the bulk... =D Still, you're benefiting from the much extended battery life and invincible bulbs.
When I go camping, I find myself bringing 4 lamps:
1) Long-Range, for trails and stuff: a non-LED lamp (9V SureFire, 4-6 cell Mag)
2) Mid-Range, for walking around the camp: I could do with an AA Mag, but I prefer the Eternalight 3 for entertainment purposes.
3) Headlamp, for working: The super-small 3LED, 3AAA Petzl Tikka is my current favorite. Plenty of light without feeling top-heavy.
4) Personal Light, for misc. activity: Photon II + lanyard - nothing beats its compact size.
Er... I am blabbing on, and it's almost morning. Hope this kinda helps! =P