I am very methodical and thorough with my packing. I first put a plastic dropout protector in the rear drop out and the front fork. I then wrap each tube of the frame, including the fork legs, in closed-cell pipe insulation and fasten them with zipties.
I then wrap bubble wrap or pipe insulation around the seat tube and headtube opening, as well as around the bottom of the bottom bracket shell and front and rear dropouts.
I usually take the fork off and wrap it in some additional bubble wrap or packing to keep it from damaging either the fork or frame during transit, but sometimes with a larger box leave it installed if there is room.
I then put flat Styrofoam at the bottom and ends of the box and put Wal-Mart bags, newspaper, etc around the frame in the bike box. Before I close the box, I place a run of flat Styrofoam on top of the frame and then close the box and seal it well with strong clear packing tape.
This may seem like overkill, but I have yet to have a frame damaged and have received many comments on "best packing job ever". To me, if the frame is worth buying or selling, it is worth protecting. I have a hard time getting below the oversize designation by UPS, so might as well use some of the allowed "dimensional weight" with packing material ;-)
Frank Phillips
McAlester, OK