Me and my ex-girlfriend were bumped off an early Lufthansa flight from Munich to London Heathrow (LHR) in July last year. We were told at checkin that the flight was overbooked, and at the gate the lady gave us the following options:

1) Take a flight to London Stanstead leaving around the same time, and recieve a free bus transfer to LHR (we were connecting at LHR with AirNZ for a flight to Fiji) - any of you who have taken a bus between STD and LHR in London's morning traffic before can imagine my reply to the agent
2) Wait, and maybe get on our original flight
3) accept DM600 in Lufthansa travel coupons (the return flight cost around DM350, so DM600 is a really good compensation)

After hassling us a bit they eventually gave us the coupons and put us on the next flight to LHR. We waited in the biz lounge, I was upgraded to biz class and my girlfriend sat in the cockpit jumpseat - Lufthansa occasionally does this on hopelessly overbooked flights. The vouchers, by the way, are in DM150 denominations, and each voucher can be individually redeemed either for travel or DM75 in cash. One unpublished perk is that a few rules seemed to be waived when you pay with vouchers - you can pay at the last minute, they will hold your reservation with no cancelling fee etc. I would definately go for the compensation package on LH's overbooked flights.

Cheers, Zac