I am in the same boat as you are, UHS05. There is a whole psychology to this as far as I can tell. Some people will tell you that your step 1 score is very predictive of your step 2 so if you did well on step 1 you should go for step 2 right at the end of third year so everything is fresh in your mind and you will probably do ok -- then you will have another good score to back up your application. Another strategy I've heard about is to take step 2 but not release your scores. that way, if they are bad you can keep a lid on them. but the programs may still want to see the score if they can see you've taken the test. (can they, in fact? I don't know)
ADBS4, I think you're right about the programs looking at the whole package with research and LOR's being especially important. However, they do use step 1 scores for cutoffs as to whose application they will even look at. With the snowballing number of applicants, I guess they have to find some way to narrow the field. I think many programs cut off around 220-230. Whether this means that you will not get an interview with scores below this, I cannot say, but I know you have a much better chance of having your application looked at if your step 1 score is above the mean.
The only caveat is if the program specifically requires step 2 (from what I can tell most don't; have heard that some of the cali schools require it but I haven't done any research on them so i don't know).