Near Field Monitors

Radio Shack makes a pair of speakers that make excellent
near-field monitors at a ridiculously low price (if you
don't compare them head-to-head with fancy ones).  One
version was also called the "Minimus", made by "Optimus",
and got the nick-name of "Minnie Mouse" (thanks I believe
to the famous Limey of n-Track Forum).

You want to get "shielded" monitors to avoid problems when
putting the monitors close to a computer CRT monitor.
(If you have an LCD display, shielding is not a big issue.)

What it takes is magnetic shielding. Metal sided montitors
are NOT necessarily mag-shielded.  The Minnie Mouses are NOT
shielded, so you need to keep them at least a foot or two
away from your CRT, if you have one.

You can mix on any decent speakers, if you REALLY KNOW them.
Be sure to listen to similar kinds of music all the time in
whatever you use to mix.  The caveat here is what "decent"
means.  You can't mix what you can't hear, so monitors that
lack dynamic punch or low end or high end will leave you
blind in those areas.  If you know where your blind spots are,
you can find compensation strategies.  Of course, those
strategies are a bit like walking around with your arms out,
so it's best to have nice flat monitors with good dynamics,
minimal rumble or chuff, well defined bass, etc.

Headphones aren't ideal for mixing, but if they're good flat
cans, the issue is more due to stereo imaging than frequency
response.  Good headphones tend not to have many of the problems
associated with bigger speakers like chuff and low-end resonance,
and that's a good thing.  Heck, it's an easier job to engineer
tiny little speakers that only have to move a little air in a
small space.

Regardless of what monitors you use, placement is critical.
The best bet is "near field monitoring", where you use small
speakers (as mentioned above) in an equilateral triangle with
your head.  Ideally about 2' to 4' on a side.  So, the distance
to each speaker is the same, and it's the same as the distance
between the speakers.  Most important, however, is that the
speakers must be at least that same distance from all walls
or anything that would reflect the sound.  They should be at
ear level. 

If you don't follow those rules, you'll have "nodes" in the
listening area, and the frequency response will vary dramatically
if you merely move your head 6" or a foot or two. 

When monitoring with inexpensive gear, one thing to keep in
mind is that you can't adjust what you can't hear. So know what
the limitations of your gear is. I once did a quick mix on
headphones without double-checking in monitors, forgetting
that my cans roll off dramatically below 60 Hz or so.  I had
a friend play it and his speaker cones just about blew out
the front of his grilles due to a very loud low D note on
string bass. Tsk tsk!  I should have known better!

Another thing to keep in mind is that no matter WHAT you
use to mix, you'll always need to do comparison monitoring
to make sure your mix doesn't have problems on various stereos.
It's nice to have a pair of Auratone comparison monitors (not
expensive, about $150?). As well as a cheap ghettoblaster.
And lots of friends! Just remember to bring the beer :) 

Finally, always double check any mix in mono mode. (Not sure
how to do this in GB.) This will reveal a number of problems
that you won't hear in an ideal listening environment, but
many listening environments were designed by decorators and
not sound engineers, IYKWIM. 

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The Radio Shack speakers: 

RCA 50 Watt 2-Way Die Cast Speakers 
http://www.radioshack.com/product.asp?catalog%5Fname=CTLG&category%5Fname=CTLG%5F007%5F004%5F003%5F003&product%5Fid=40%2D5001

$40 each. 

Quoting Mac from n-Track forum: 

    For a power amp, you need only look to a home stereo hifi
    receiver or integrated amp with an output power rating of
    anywhere from 10W to about 100W.  Use fuses in series with
    the speakers to protect them from higher power
    (1/2 to about 3A fast acting 3AG type) -- better to use
    an amp rated higher power than the speaker handling and
    just use your head about that to prevent damage, you will
    have more available headroom power for transients. 

    If you don't have an extra hifi stereo machine around, visit
    the local thrift shops first, I've picked 'em up for as low
    as ten bucks there and garage sales, most only need the
    controls sprayed out with a bit of contact cleaner to work
    good as new again. 

    No kiddin', these radio shack speakers can work as well as
    nearfield monitors costing many times the price, don't forget
    about the Law of Diminishing Returns when shopping: five
    hundred dollars more yields a small percentage of improvement.

You will get a MUCH better idea of the stereo image using
these speakers than using headphones, especially if you use
any phase-related techniques. And phase-related techniques
have a much stronger, more pointed stereo location effect
than merely panning.  Panning is just the first step to
building a stereo image, and usually shouldn't be the last. 

With headphones, each ear hears only one side. 
With speakers, each ear hears one side louder, and the other
side quieter and also a little delayed and also with an EQ
difference. Google up "HRTF", for "head response transfer function"
if you want to read more science than most people can stomach
on the subject. 

A mix sounds much wider in headphones than speakers.
A good mix USUALLY sounds good either way. However, sometimes
for artistic purposes we mix something that sounds killer through
speakers but stinks in headphones. This is fine but should be
done knowingly and understanding the tradeoffs, rather than by accident. 

If a mix sounds "just right" in headphones, it'll genearlly sound
too narrow through speakers.