Alright so here's my AWESOME hybrid setup in my living room:
Now you are probably wondering "what's so awesome about this?" Well here is the deal: both screens (the HDTV and the PVM) are placed perpendicularly to each other, each with a couch in front of them. To play one or the other, you just go to the appropriate couch. OH MY GOD THAT'S LIKE TWO LIVING ROOMS WITHIN A SINGLE SPACE, HOW CLEVER
Let's look at each section separately:
The "retro" side
Top row: SNES (on subwoofer), Genesis 2 with Sega CD 2, Sony PVM 20M2U, consolized Neo Geo MVS by jamma-nation-x.com
Bottom row: "Super 8" NES clone, RGB+region modded PCE Duo-R by doujindance, Sega Saturn, Bandridge manual 5 port SCART switch
The "mostly but not entirely modern" side
Top row: Mac Mini 2010 (used as HTPC and for audio rerouting, more on that below), PS2
Middle row: Xbox 360, AV amp (with PSTV on top of it), PS3 (also have a PS4 in my bedroom that I occasionally swap with it)
Bottom row: Wii U, collection of arcade sticks, Dreamcast
Getting proper audio
As I'm using the same AV amp and speakers for both setups, this posed an interesting challenge due to the stereo effect being initially wrong on the retro side. To fix this, I have routed all sound from that side to the line-in port of my Mac Mini, and then
with this very handy app called "LineIn", I can forward it to the proper 5.1 channels (left -> front right, right -> back right) to get the proper stereo effect.
Switchable display
Both the Dreamcast and PS2 are located so that they can easily be switched between the HTDTV and the PVM, depending on what's best for each individual game. For the Dreamcast this is simply done by switching the VGA box between VGA (HDTV) and S-video (PVM), for the PS2 this requires a cable swap but it's set up to be as less hassle as possible.