There are two comic shops in the city I live in, the first (the one I use) racks the issues alphapbetically by title and to show the full cover (pic below). It makes it so easy to find what you want and to scan through and see if anything else piques your interest.
The other store racks them like in your first picture with maybe 10-15% of the spine side of the cover visible. They also rack by publisher. I gotta say the few time I've tried to find something in that store I've given up and asked the person behind the counter because things are really difficult to find.
If I had to find things in the second rack you have pictured (the "waterfall"), I'd either go mad or give up.
My LCS also gives away (as I'm sure many others do) the weekly release of Comic Shop News. As a customer who doesn't read previews that's a great source of information as to what is upcoming. In fact, based off last weeks issue, I added 4 new titles to my pull list this week. That said they seem to feature more stories on Valiant published books than the other publishers which can get annoying as I would prefer a more even spread.
Agree with momaw 100%. I have seen both racking's and I hate the waterfall, it makes things too difficult to find. My LCS has the books similar to the photo above. Alphabetical but 3 categories (Marvel / DC / Indy / Licensed.. like Star Wars).
Though certainly preferrable, the fact that the titles are hard to see without bending down kind of goes against Brians entire point.
I guess I prefer titles to be racked by publisher, just because I'm used to it. Put the titles next to their related buddies, so X-Men or Spider-Man or Green Lantern fans have a whole little section. Though theres something noble in stacking them by merit if you have good taste in comics. Recommendations are an important part of any good comic store clerk, though a secondary shelf depicting "Staff Picks" might be a better way to go if you have enough copies.