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>> Personally, I think that most people would be well served to become an S-Corp (depending on income levels, of course). The legal protection the S-Corp affords you is worth the extra business cost of the paperwork. It really helps to isolate you in the event of lawsuits. Your personal assets are much better protected.
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>I don't have much in the way of personal assets, so it makes little difference for me. :-)

Unfortunately, in this day and age, you don't have to have a lot to get sued. For instance, you write an application for a customer. Something goes wrong in the program and it (somehow) overwrites some of their important files. Of course, these are the same files that they never back up :) They sue you personally for $100K in damages.

If they win, you'll owe them $100K regardless if you have it or not. If I remember right, you can't discharge court judgements if you were to file for bankruptcy.

If you were a S-Corp, the corporation would be liable (even if they tried to sue you personally, they would probably lose). You close the corp, let it file bankruptcy and you can stop worry about it. Want to protect your companies assets (ie. your computer equipment, for example) in case of a lawsuit? Take ownership of it personally and lease it back to the corporation. Now if they were to sue, they couldn't even take your computer.