I've found the best way to power up PC's is with an in-game event that suitably explains a sudden leap in abilities or resources across the board. My players tend to be diplomatically inclined, so they frequently walk out of a situation with more allies than most parties would. Sometimes, I just use that to provide everyone in the party with a cool magic item of their choosing, or perhaps the granting of a single feat (obtained via ritual or something like that). It's rarely done, and the players haven't come to expect it (because they generally don't trust me when my mouth is open and words are coming out of it), so it hasn't been abused or overpowering.
Recently, I realized that my players will be woe-fully underpowered when they face the BBEG. I intend to end the campaign when the players are in the 20-25th level range, and the BBEG is currently 40th level. The party is 10th. While it's true that the BBEG is unlikely to gain nearly as many levels as the party, if any, they are still a TPK waiting to happen, and I don't want to have a campaign climax on such a down note. Fortunately, the gestalt rules provide the perfect way to handle two problems in the campaign at once: powering up the party so they have a fighting chance, and fixing a curse of which the party is the collective victim.
The BBEG in question caused most of the party to be inflicted with amnesia, and then polymorphed them into slightly different bodies and dumped them on another planet (originally, they were from Oerth; now, they're on Toril). The party has figured out that everything before the last five years was taken away from them, and that they're crawling back up to something approximating their original power levels (they used to be 15th level characters in 2E; they started this campaign as 5th level characters).
So, the gestalt rules are now in effect from 11th level on. Everytime they gain a level, one of the class levels they choose MUST be from one of the classes they had before they had amnesia. This will give the players more options at higher levels and a better feel of 'regaining what they lost'. (Those character that don't have amnesia are going to have a similarly narrow list of classes that must be advanced along with the gestalt level.)
I think the gestalt rules are a great way to handle power-ups, and give players a bit more range. This is particularly useful in campaigns that add new prestige classes, spells, and the like whenever a new supplement is published. The players will find it less difficult to meet the purely mechanical requirements for these classes, and will therefore feel less 'cheated' because they made their characters before these new classes were available.
BTW, I've kind of been assessing every gestalt level as the equivalent of about 1 1/2 ordinary character levels. Anyone else out there feel that's about right, or would you actually say that gestalt levels are twice as valuable?