For long time it was split screen gaming (for many of my XBLIG games).
But for my new engine, I'm doing it another way.
All player are on a single screen and a small part is reserved for each player interface.
But for bigger game like "little Kingdom 2" with several resources and lot of interactions, it's a problem, I can hardly put 23 buttons in my tiny interface...
Even if it was possible, it's hard for the player with a pad to go in the corner for each interactions.
So I'm using this circular contexual menu.
It doesn't take a lot of place, and you don't have to move the cursor a lot.
So the game is playable even if 4 player games. And the interaction speed is nearly the same for the mouse player than for the pad player.
In LK2, I'm using 3 distinct circular menu and it work pretty well!