With two microphones available, the most common approach--and certainly one of the best--is what I will call the "snare and bass drum" approach. As one progresses from playing with only the acoustic sounds of the kit itself to playing "miked up", the first drum to get a microphone is usually the snare. This is usually done with a directional mic (one which captures sounds mostly from the one direction toward which it points), and a good general guideline is to place the mic so that its receiving point is 1 inch above the drumhead and 1 inch inside the rim of the drum. With most mics in this position, you will also pick up some hi-hat sound, depending on your particular kit's arrangement.
Adding in a second mic allows a drummer to bring a fuller sound to bear in a live situation, and most drummers choose to mic the bass drum if given the opportunity. There are a wide variety of bass drum-specific microphones available, and most often they are placed somewhere around an inch from the surface of the front drum head (the one furthest from the seated drummer). Many directional or drum specific mics are mounted to the rim of the drums they are intended to mic, but bass drum (or "kick" drum) mics are almost always intended to stand independently. Even so, many do not come with stands, which need to be purchased separately.
The snare and bass approach leaves any riding toms or floor toms and all the cymbals except for the hi-hat without amplification. Knowing how your amplification is working and having others on-site who can give you feedback while you soundcheck will allow you to adjust your playing so that the other drums come through when needed. Cymbals are generally built to cut through most any racket, and a large percentage of the time you're drumming in a rock, blues, country, or even jazz setting, the bass and the snare are the primary sounds desired.
This approach is more often used for jazz, latin, or less backbeat-based styles of music. Two tall stands can be used to hang either directional or multi-directional mics above the entire kit, including the cymbals. This allows the mics to pick up any sound rising from the surfaces of the drums and the cymbals (although these sounds will be impossible to treat individually on the soundboard or the PA's mixer). If your playing style emphasizes technical ride cymbal work and softer but flashier fills across the toms with less need for that rock-solid "boom-chick", this approach might be the best one for you.
Often, drummers who hang mics above their kits choose to place some kind of screen in front of/surrounding the kit and the mics, so that the microphones do not pick up sounds from the rest of the band or ambient sounds from the room and crowd.
As you experiment with this approach, the exact placement of the mics, especially their height, will give you some leeway in the sound coming through your PA.
Placing mics and playing drums well does not guarantee a good live sound through a two-mic setup. You need to know how your PA works or have someone available who does.
The nice thing about having your set "miked up" is that, given there is someone around who knows how to use the PA's mixer or a full-on soundboard, your drums will sound better than ever. This is because even a basic PA mixer can bring out a fuller tone in your snare drum or cut down on a kick drum's long-lasting reverb, for example.
When you find a mix you like, note the levels of treble, bass, etc. you have been using so you can quickly replicate it later. Also, when these settings are dialed in consistently, you can play around with very specific mic placements to get that precise sound you and your band love.