When I knit two colour fair isle and the colour changes max 3-4 sts apart, I used the mc over the top and the cc always under. This avoids tangled yarn.
However, I am making this hat http://www.ravelry.com/patterns/library/two-color-naughty-kittens, and it has sometimes 7 or 10 sts in one
Colour. So by carrying the float I have to wrap the yarn around the second colour. Hence tangle city!