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A strategy I plan on testing: start with broad match, see what keywords are converting the best and any keywords that don't convert, put them in a negative list.
Granted, this would cost a little more than starting with phrase match.
There really is no right or wrong way to do your set up. A lot of it is trial by error...it is really hard to define and test to see which works best for you and your site.
I personally think it is best to use exact match keywords. However, I do use all three types depending on my adgroup and keywords.
[edited by: tedster at 11:21 pm (utc) on Mar. 11, 2008]
If you stay on top of your negative keywords, you can use phrase and exact match to drive more targeted traffic to your site. If you have the money to blow on testing, then keep testing with broad match.