I do a LOT of night riding. I love it.
Mostly I use a cheap LED headlamp I picked up at Target for $25 (no longer sell them). It's 136 lumens and I run it on an external 4AA battery pack. In the summer the battery pack is velcro'd to the back of my helmet. In the winter I dangle it around my neck or down my back inside my clothing so the cold doesn't have any effect on my light's longevity or brightness. I tend to get about 6-8 hours out of either rechargeables or new batteries.
== AA's vs. proprietary batteries ==
The reason I go with AA is for flexibility. For commuting I use rechargeable AA's. When out touring I cannot stop to recharge my batteries every other day. I usually use the hand me downs from my digital camera.
It also helps to be able to pick up batteries anywhere if you forgot to bring a spare set or recharge yours.
== brightness ==
BTW, 120 lumens is the brightness of the Nite Rider Mini Newt USB. Generally 120 lumen appears to be enough brightness for commuting.
When out in the back country and far from civilization and car headlamps your eyes adjust btw and you can go down to as low as 45 lumen... which is more a typical headlamp. Of course if you're riding with someone else with a brighter light it'll throw off your eyes. As will oncoming traffic.
== consumer LED tech ==
Right now they are making a lot of breakthroughs in the efficiency of LED lights. This technology is trickling down into the mainstream market pretty quick. Last year (maybe closer to two years now) Luxeon LED's were the thing running at about 85 lumen. This year it's Cree which tend to run 120-150 lumen. It's about time for something new to eclipse this.
Because of the advances cheaper consumer lights are leapfrogging the mid range bike specific light models. The Nite Rider Mini Newt being a great example. My the Mini Newt is a very cool light my $25 target light puts out more light then it and last longer.
Target no longer carries the light I use but there are many on the market you just have to keep an eye out for them at big box stores and hardware stores.
Fennix makes a great headlamp called the HP10 that claims up to 225 lumen. Super efficient, many modes, runs about $65. Probably the best thing I've seen on the market.
I have also seen 4AA headlamps at Lowes for $30 or $40 that claim 150 lumen. And Cabellas sells one similar for $30-40.
These all run on the Cree LED's.
There are also some breakthroughs happening on the higher end but i won't get into them here.
== headlamp vs. handlebar ==
If I could only have one light it'd be a headlamp. Because of the low angle of delineation between it and your eyes it picks up well on anything reflective.
This is great because it picks up car reflectors, road sign's, mail boxes, and a favorite thing.. animal eyes (cats, raccoons, rabbits, deer, etc.).
This keeps you from getting that myopic numbing feeling from staring at the patterns made by the halo of light from a handlebar light. It keeps you looking out ahead and looking around as you should.
I also quickly shine people who are approaching with their brights on and it seems to be just bright enough to be effective at getting to turn their brights off.
For safety reasons I will also briefly shine cross traffic stopped at lights, stop signs or coming out of driveways and parking lots. This is a huge safety feature as getting cut off is the most likely way to get hit. Cars typically cannot see you especially in the city where there are all sorts of bright lights and distractions.
I also like that my headlamp can either be thrown in my bag or permanently attached to my helmet and taken inside. No security issue.
There are however a couple disadvantages to the headlamp.
The light from headlamps tend to flatten out the road a bit because it doesn't cast shadows across pot holes and bumps.
Of course the advantage of having a narrower beam that can cast light out further then a diffuse handlebar light may give you more warning and thus offsets this problem.
Snow, heavy rain and above all fog all bounce back headlamp light in your eyes.
Handlebar, or even lights mounted on your fork cast really good shadows across bumps and pot holes on the road making them stand out. However the have to be wider and are therefore more diffuse. They won't cast light out as far out as a more focused headlamp.
Also because they only shine straight out you can't see where you're turning too. This is mostly only a problem with twisty / turny trails though.
So what's the answer?
If you can swing it go for both. They work great in tandem. Handlebar light for the near ground and headlamp for the far ground.
== safety lights ==
That said don't forget about and don't underestimate the need for blinky / strobe safety lights.
As I said if I only had one light it'd be my headlamp, but for commuting especially in the city safety lights are key.
Blackburn Fleas are really hot right now. Ultra minimal, tiny, bright, USB or AA rechargeable makes them great for commuting. Just plug it in to your computer at work during the day.
There is also the Planet or Serfas brand "Super Blinky". These things are fairly cheap ($15-20) run on two AAA forever, claim visibility for a mile and certainly deliver it.
I have one on every one of my bikes. They are the brightest thing on the market. They change the way cars respond around me. I.E. they actual slow down and give me space.
I think some people actually think I might be law enforcement when they first see the light. Best light ever.
Finally... don't underestimate reflectors. Especially wheel and pedal reflectors whose motion get attention and define you as a bike. They appear far brighter to cars then bike lights because they reflect back a cars own much brighter lights. However if you're not in front of a cars headlights then they're invisible... which is why you also need safety lights as well.
A good example of when reflectors fail is when cars are sitting at intersections and cross streets you're approaching. You're not actually in their beam until you're in front of them and by then it's to late. Cars pulling out into you or right in front of you is definitely one of the most dangerous scenarios. Especially in busy urban and suburban environments.
If I just had a $1 for every time some jack*ss on a cell phone followed the person in front of them through a four way stop sign I'd be rich.
== idealized setup ==
An ideal setup would be:
1) 120 lumen or higher fairly focuses headlamp
2) a 85+ lumen or brighter wide / diffuse beam fork or handlebar mounted light for the near ground
3) a super blinky tail light
4) a flea or other strobe mounted on the handlebar
5) standard pedal, wheel, handlebar and seat reflectors.
That said... I have a lot of bikes I jump around between and don't ride so much in the city so I often just go with the headlamp and superblinky tail light.