In A Manual of Style for Contract Drafting 12.21, I recommend that you use only one space, rather than two, after punctuation, whether it separates two sentences (periods, question marks, exclamation marks) or parts of a sentence (colons).
I’m hardly alone in this. The Chicago Manual of Style 2.12 (15th ed. 2003) says “A single character space, not two spaces, should be left after periods at the ends of sentences (both in manuscript and in final, published form) and after colons.” To my mind, that settles it, but I’ll note that The Associated Press Stylebook (2004) also calls for one space. So does Bill Walsh’s Lapsing into a Comma (2000). I could list others.
Nevertheless, even after rooting around online I remained uncertain what prompted use of two spaces and what prompts calls for use of one space. I recently found a very helpful discussion of the issue in James Felici, The Complete Manual of Typography (2003). Here is what Mr. Felici has to say about “word spaces,” which he defines as blank characters created by pressing the spacebar on a keyboard:
Typewriter spaces have the attraction of always being the same size, so it was natural to use them in multiples for paragraph indents or gaps in a typewritten line. You could align things by adding word spaces before them.
Spaces in word processors and typesetting programs, though, have no fixed width, so they can’t be used in this role. Not only do the widths of word spaces (or space bands) vary from typeface to typeface, but they are also flexed—made wider or narrower—as lines of text are fit into a given line length, or measure. In fact, dedicated typesetting systems routinely ignored multiple word spaces, collapsing them into a single space, because consecutive spaces have no role in typesetting. Multiple word spaces were assumed to be a mistake.
Nevertheless, the habit of aligning text by using series of word spaces has persisted, mainly because word processing programs (and the desktop publishing programs based on word processing precedents) allow it. Indents should ideally be created with a program’s indentation commands or, less desirably, with the Tab key. Gaps in text should be created with a series of fixed spaces, such as em and en spaces, whose widths are constant unless the size of the type changes.
The typewriter tradition of separating sentences with two word spaces after a period has no place in typesetting. The custom began because the characters of monospaced typefaces used on typewriters were so wide and so open that a single word space—one the same width as a character, including the period—was not wide enough to create a sufficient space between sentences. Proportionately spaced fonts, though, contain word spaces specifically designed to play the sentence-separating role perfectly. Because of this, a double word space at the end of a sentence creates an obvious hole in the line.
[Updated April 6, 2013: In fact, it's not clear that use of two spaces after a period can be attributed to the typewriter. Robert Bringhurst, The Elements of Typographic Style 28 (3d ed. 2004), regards it as a matter of typography fashion, calling it "this quaint Victorian habit." For Dave Bricker's blog post considering the history of use of two spaces, go here.]
It is now even clearer to me why using one space is the better option. Nevertheless, the question persists. Frank Romano, professor emeritus of the School of Print Media at the Rochester Institute of Technology, told me that it comes up almost weekly, presumably to his chagrin. [Updated April 6, 2013: It remains a hot topic. See, for example, this 2011 Slate article by Farhad Majoo.]
Of course, law firms and most lawyers are wedded to two spaces. It would be a mistake to assume that this is the result of a reasoned decision. Instead, you can attribute it to the same oblivious conservatism that has caused them to perpetuate any number of other deficient usages.
As the online Chicago Style Q&A states, there’s no evidence that using two spaces makes text easier to read. Consequently, the only conceivable defense of the practice is that it’s harmless. But as also noted in the Chicago Style Q&A, using two spaces is inefficient, requiring an extra keystroke for every sentence, and is harder to control, in that any document created using the two-space rule is likely to contain a “a smattering of instances of both three spaces and one space after a period, and two spaces in the middle of sentences.”
So if you’re still using two spaces, stop it—your credibility is at stake!
(This post was written from the U.S. perspective. I’d be interested to hear how this issue—if it is an issue—plays out in other countries.)