With about 8 night races under my belt in varying conditions (wide open grasstrack to tight, technical woods; perfectly clear skies to thick dust to raining downpour) I say a decent headlight and a really good helmet light are the hot setup. The faster you ride (i.e. MX or grand prix vs. enduro), the more light you need. In the woods I've been able to get away with a 35W headlight and minimal helmet light. For grasstrack and high speed stuff a 60W headlight and 50W helmet light have been good. Some people go all out with huge double HID's on the bike and their helmet. Chest protector lights don't seem to work very well.
A helmet light really fills in the gaps and allows you to see where you want to go, while the headlight allows you to see where the front of the bike is pointed. The more you can see, the faster you can go...not to mention it's much safer!
With the helmet light it is imperative that you either have a breakaway power cord from the bike or keep the power pack on your body so that you aren't tethered to the bike. I prefer having the power pack in my fanny pack or on the front of my chest protector. That gives you the most freedom of movement and allows you to have lights after a crash (nice for finding your bike), for working on the bike, etc.
Helmets lights from Nite Rider, Cyclops or Trail Tech are all good. HID lights are really good, but you will pay more. None of these are cheap, but neither is throwing away a race because you can't see.