Being on the municipal side and out on the road for almost all of our work, to be honest, I have damn near no faith in people driving though a work zone. We have had people literally drive into a tree that was felled into the road while we were chipping it. While by the book traffic control is a pain, I am a firm believer in protecting ourselves, I would rather have someone kill some cones, or hit one of our trucks then hit someone on the crew. That being said If you do a web search for mutcd temporary traffic control / work zone safety a bunch of links will point you to what the federal regs are. This is a good idea of what your dealing with-(
http://mutcd.fhwa.dot.gov/htm/2009/part6/part6h.htm).
If you are regularly working in roadside, or even within the right of way you should really brush up on the mutcd guidelines. Just like any other regulations, if heaven forbid an accident occurs and your work zone was set up contrary to what the regs say, your liability exposure increases. A couple key points, you are required to use certain size cones and warning signs depending on road speed, and time of day, I think it is 28" cones with dual reflective stripes for anything over 35mph, and 48" warning sings, on anything over 45mph. I imagine most states require anyone who is flagging to have a flaggers certification, ours expire every two years. Flaggers are required to use the stop / slow paddles, not just someone using hand signals. Also if you are working in the right of way(this includes almost any city street) you are required to wear the appropriate level reflective clothing or vest. I know most of us don't follow these regs exactly, but it never hurts to be better informed.
So for a typical side street set up, where you are chipping in the right of way, you should likely have a couple "tree work ahead signs" or equivalent, and and some appropriate size cones set up around the chipper and chip truck. We carry 4 signs,(tree work ahead, road closed, and merge signs) and 24 cones between our two trucks and this gets us though almost every set up except for the major roads where we need an arrow board.