Most common and recommended is the pea method.
Small glob of paste, about the size of a pea. When you apply the heatsink, the pressure will spread the paste across the CPU. Its worth also sliding the heatsink around a bit before screwing it down, to further spread the paste.
Video of the various methods. Ignore the general retro-ness of the video http://www.youtube.com/watch?v=ffK7L0Qj13Q