I usually apply a 'squeezed' penalty of -4 on attack rolls and -4 to AC, and I treat the space as difficult terrain. I also increase fumble chance (fumbles threaten on natural 2 or lower), but if you don't have fumbles in your game that may to be meaningful. Some swung weapons, usually those whose only mode of damage is 'slashing' or 'bashing', can't be employed normally if you lack room to swing and have to be employed as improvised weapons - generally with a -2 non-proficiency penalty to hit and reduced damage die.
The 'squeezed' penalty can be partially mitigated by an escape artist check which has a DC that depends on how confined the PC is - usually halving the penalty and allowing the character to treat it as not difficult terrain (so long as they are not crawling).
If the ceiling is so low that the PC's are crawling, I apply rules for crawling. You can crawl 5 feet as a move action. Crawling incurs attacks of opportunity from any attackers who threaten you at any point of your crawl. I also rule two-handed weapons can no longer be employed in their normal function, and shields may not fit in the space at all, or if they do they might either represent mutual cover or have no use at all. This is more of a judgment call, and depends on what the PC says he's doing with the shield, how big the shield is, etc.
If the ceiling is so low that the PC's are belly crawling, they are crawling but need to make DC 5 escape artist checks just to move between squares, and I pretty much would allow normal attacks only with light thrusting weapons like daggers. Shields other than bucklers are no use at all.
I've never really differentiated much between ceiling heights except to make a judgment call as to whether the ceiling height bothers the character, and to what degree based on the PC's height written on the character sheet. Typically I'll say something like, "All characters over 5' tall take full squeezing penalties unless you can make a DC 10 escape artist check this round." To the extent that I'd differentiate, I'd probably say something like, "Because Sir Garinthar is 6' 4", apply a -2 circumstance penalty to the check."
As an aside, difficult terrain of various sorts is generally the solution I have to keeping low CR monsters relevant for longer periods of time. The fact that I also regularly use slippery slopes, stair cases, confined passages, low ceilings, uneven footing, ledges and pits, water hazards of various sorts, inhospitable climate and so forth is also the reason almost none of my players end up using heavy armor. Armor check penalties are horror shows on anything but level open ground.
