Angelo Basile has an interesting post on using Babel and Org Mode for literate programming. As he remarks, his setup is particularly useful in an educational environment.
It’s a short post but has some useful ideas. If you’d like to try a sort of light-weight literate programming take a look at Basile’s post and try it out on a small program. Pay particular attention to the #+PROPERTY line that he puts at the top of each file. It sets up a nice default environment.