Here's the setup I've been using for my group's D&D 4.0 games. I went with an arena-style build to allow faster building of maps. The floors are all 1.5" tiles, and the walls are either 1.5"x1.5"x1" blocks or 1.5"x3"x1" blocks. I build 40 of each type of wall. I'm still building more doors, arches and stairs, as well as trying to get some decor painted, like barrels, crates and bookshelves, etc.
Here's the battlemat of cavern floor tiles. It's 24 tiles by 24 tiles, for a 3' x 3' area.
Here's a 1.5"x1.5"x1" wall section, based in rubberized cork.
Here's a 1.5"x3"x1" wall section, also based in rubberized cork.
Here's the whole thing in action:
And a close-up:
Here's the pile o' walls:
Here are the plexiglass water tiles we use:
And the stairs I've made so far. Note that there's only one step, leaving enough room for a miniature to stand on it.
Here's a picture of the floor tile sections, showing the basing of one. For the floors, I used 1/4th inch rubberized cork, because I wanted cork that wouldn't break or tear if it got folded onto itself. This stuff does the trick, though after gluing all the tiles down, they don't really bend at all, anyway. Very rigid and easy to move around, but the cork keeps them from sliding on the table if the table gets bumped.
Finally, here's a close-up of the wall blocks and the basing. I used 1/8th inch rubberized cork for them, which is easier to cut (so I bevelled the edges), since I knew I would have to worry about the basing flexing or bending.
So let me know what you think. I've been really happy with how all this turned out. I originally build a set of the arena walls that Bruce describes in his dungeon arena and dragon's teeth arena guides, but decided that the walls were too busy and distracted from the main action on the board. That's why I went with very basic blocks to be walls.
My next step in this project will be to build a set of thinner walls (.5" thick) for dungeon sections which aren't using 5 foot thick walls, as well as more doors and stairs.
Edit: I forgot to mention how awesome and helpful my wife was in all of this. She helped me paint the walls and also gave me the idea to bevel the cork edges (and let me use her fabric cutting tool to do it).