The topic of dividing the treasure got a lot of play back in early editions of D&D. AD&D had (of course) a whole series of different ways of dividing it. Gary Gygax divided a whole section of his intro materials in B2 to the subject.
Even modern games have taken a shot at it - GURPS Dungeon Fantasy devotes a couple of paragraphs to it in DF2.
Back in the day, we went round the table in some kind of order - usually diced - and people took what they wanted. One especially memorable trio of players in my junior high days would do this for all non-coin treasure, nevermind magic items. They were the kind of guys who'd take a wolf pelt cape over a suit of magic armor because their guy would look cooler in the cape.
Recently, my players have taken a more collective approach. Money is divided evenly. Magic and special non-magic items are given the person who is best suited to use it. If it can be used by multiple people, they tend to come to some kind of agreement on who deserves it or needs it most.
There is occasional moaning about giving good stuff to people who didn't come on the adventure, but it has been known to happen that way too. After all, that magic sword might save your character if you give it to the character of the guy who missed that session and let him use it. Other times they just sell it and say, oh well, you missed it. More the latter than the former in my current dungeon crawling game.
I'm curious how other folks do treasure division. One of the types in the old AD&D books or one of the broad methods in DF2? Some other way of doing it?
And if you've got a preferred method, any special reason why?