I was going to write about this some time ago and never got round to it but Jeff Atwood covers it much better than I could ever hope to. Another reason I thought I'd highlight this is after a conversation with one of our clients who'd paid a company to write an ActiveX control to produce printer friendly versions of web pages. There really wasn't any need, it's trivially simple to produce a stylesheet for printer-friendly output, generally all you need to do is hide some of your headers and menus etc. Even with my pathetic CSS skills I managed to create one for the Random Pub Finder.
On the other hand I'm not so sure about the use of a handheld stylesheet though. I did one of these for the Random Pub Finder as well, but as far as I can see we never get any hits from handheld devices. Also, I may be wrong but I think quite a few handheld devices actually ignore the handheld stylesheet and just render websites using the standard stylesheet. This is probably due to the lack of websites that actually provide a handheld stylesheet, meaning any handheld device needs to be able to cope with full-size pages anyway. And finally, it's a right pain testing your site against the huge number of devices out there, particularly as the emulators always seem to be a pain to set up.