I love my battlemat! Simple setup really. A few markers, draw simple lines and indicators, I use homemade standees with just names on them for players, and various colored glass beads like those used by TCG players.
One of the things that I find is that I run roleplay intensive games, which are highly aided by my battlemat. Sometimes having a visual aid as palpable as where everyone is in the room helps people take the most of a given circumstance. Players remember to keep their voices down because someone is only two barstools down. They know which shoulder to look over to signal to a friend. I may sound like a bit of a wimp for saying this, but just because roleplaying is a feat of the imagination, doesn't mean you have to let your imagination do all of the work.
The battlemat not only makes for great combat, but helps my players keep roleplaying situations in perspective. I've never had the following said at my table:
"Listen, there's something I need to tell you, secr- wait a second, ok, out of character... how far down is that shading halfling? He's at the bar still, right? Oh, ok, he's far enough away... *ahem, lowers voice* there's something I need to tell you..."