Earlier this week, I blogged on one blogger's SEP-IRA in order to shield self-employment income generated by his blog. The IRS webpage has several resources on setting up and maintaining a SEP-IRA.
The big pluses of SEP-IRAs are the high contribution limits (25% of compensation or $42,000) and lack of broad regulation (similar to 401(k) plans). The downsides are that contributions are limited to employer-only and everyone must get the same percentage if there is more than one employee. Also, SEP-IRA contributions vest immediately, unlike many other plans that allow step-vesting.
The SEP-IRA is available for businesses of all sizes, but is aimed particularly at small businesses. If you are self-employed, I see no reason not to use one to lower employment and income taxes.