If my players are pretty active, I go with initiative groups pretty much identical to what ArcaneDesperado uses, though I sometimes fudge the NPCs down in order to keep it to four groups or less. I've considered using zelamonster's system, but I think what I use now suits me well enough.
With players who are less active, I would lean more strongly towards zelamonster's style, and no matter how active my players are, I give them a set amount of time to post before I skip them and move on with the fight. When skipping a player, I have them play it safe; that might mean taking a total defense action, or it may mean casting low-level spells to conserve resources. I ensure that the players who are getting skipped don't get as much glory as the ones posting on time.