@edit See my comment below fot the better alternative.
Most people who decide to put their dotfiles under version control start with a single repository in $HOME, adding all their dotfiles (and possibly more) to it. This works, of course, but can become a nuisance as soon as you try to manage more than one host.
The next logical step is to create single-purpose repositories in, for example, ~/.dotfiles and to create symbolic links in $HOME. This gives you the flexibility to check out only certain repositories on different hosts. The downsides of this approach are the necessary manual steps of cloning and symlinking the individual repositories. It will probably become a nuisance when you try to manage more than two hosts.
vcsh takes this second approach one step further. It expects single-purpose repositories and stores them in a hidden directory (similar to ~/.dotfiles). However, it does not create symbolic links in $HOME; it puts the actual files right into $HOME.