There are at least two broad approaches, and combinations of them. We've tried 'em all. At the moment we manage 3 iPhones (parents and one child) and 1 iTouch as well as several iPods.
I'll share our experiences here.
Apple's preference is for every family member to have at least a separate OS X user account, if not a separate computer. Each person should have a companion MobileMe that manages synchronization across multiple machines. Apple would probably prefer that each family member have their own iTunes (.mac) account for media purchases, so DRMd material would only play on one device.
This approach does have advantages, but there are obvious disadvantages. It's an expensive and complex approach with a lot of management needs and there are issues with sharing apps and movies.
We've used a variant of the "Apple approach" with two user accounts on one machine, and all purchases through a single iTunes account (mine). One account owns iTunes and apps, the second subscribes to App updates through "family sharing" [1]. This does enable each account to have its own Address Book and it aligns well with using MobileMe on phone and multiple OS X machines.
This "classic" multi-user approach blows up completely when you add Parental Controls. Among other problems, MobileMe is violently incompatible with Parental Controls. I wasted hours trying to make it work before I retreated to a much simpler Google approach.
The Google Approach [2] is relatively painless. I use it with my son's iPhone. I sync it in my user account for media access and app installation, but I use Google Sync (Exchange server/ActiveSync) against his account on our family Google Apps domain for the phone's email, contacts and calendar. He could access the Google Calendar and Mail through a Parental Controlled account using OS Mail and iCal but in practice he just uses his phone [3].
There are some downsides since iTunes is designed for a single user with a single set of "last played" values and ratings, but in practice the confusion is modest and the pain reduction is immense. It's also much cheaper than the "Apple approach".
So, going forward, we're making less use of the OS X desktop, more use of Google (alternative is MobileMe) cloud services. This gets around the sharing/identity problems of iPhone synchronization.
--
[1] We go through some geeky maneuvers so that my wife can have full access to all media from her user account without replicating files. See links below for tips. In short; set iTunes to not import, then media library into client iTunes. Incredibly iTunes creates links to media.
[2] You can do this with MobileMe on the iPhone and the MobileMe web interface, but without the Parental Controls-incompatible desktop you lose a lot of the value of MM. For various reasons we've gone the Google approach.
[3] Google web browser access is (yet again) OS X Parental Control hell. You can't enable web access to a Google Apps domain without enabling access to Google search.
See also:
- The flaw in iTunes: 2 users, 2 iPods - and our brain locked future (2005, introducing BrainLock with Palladium Inside, aka the RetinaChip)
- iTunes 9 home sharing is mediocre (2009)
- The ultimate AirTunes, iPhone Remote, iTunes setup
- Working around iTunes lack of multi-user support
- Sync iTunes Libraries Between Two Macs