What I do...
I tend to use a three-document structure:
Overview: A very quick treatment of the setting, answering the same six questions asked in the Wizards' setting search. Generally, it runs to 2 pages.
Rules Digest: This contains all the new rules for the setting. New races, classes, feats, or whatever. Quite often, this includes feats taken from various books I have, to cut down on what I have to take to the game. Perhaps importantly, this is written as though I were running the game without house rules, so the new races will list favoured classes, despite the fact that I never actually use them. (So, this document details the rules connected to the world, not those related to games I run.) I try to keep this document down to 10 pages, but I haven't managed yet.
Setting Bible: This contains all the fluff associated with the setting. The chapters are mostly the same as in the FRCS: Intelligent Races, Magic of XX, Life in XX, Geography, Religion and Cosmology, History and Legend, Organisations, and Major Characters. It tends to run to 100 pages.
I don't bother to split things into player and DM sections, for three reasons: Most players don't read the setting bible, so any spoilers are a reward for those who do; I don't write down truly secret stuff, and since I'm the DM it's not really important that I do; and I just can't be bothered.
When I run a campaign (in any setting), I quickly produce a document outlining any house rules I'm using for the campaign. This contains things like "no favoured classes", "fixed hit points per level", and so on. It tends to be quite short. The reason for splitting the rules like this is that I change the house rules quite often (from campaign to campaign, never in the middle of a campaign), but the rules associated with a setting are rarely if ever changed.
