I've always found working from a laptop to feel very cramped, I find it so much easier to work with more space, is there an unknown advantage to using a smaller display or is it just personal preference? (My setup: http://i.imgur.com/uKpyV.jpg)
Having your whole working life on a single laptop (with multiple types of backups) is a real convenience and time saver.
More seriously, I think that your setup would hurt my eyes. Having a dedicated monitor is far nicer than using a laptop, but you have screens dominating your peripheral vision. One decent-sized screen is much nicer in my opinion.