I often shoot birds with a 1DMkII, and the 500mm IS or 100-400 IS lens. The 500 is always used on a tripod, while the 100-400 is handheld as often as it is tripod mounted.
Because I find I must pan with birds in flight I have found the following setup more effective for me:
1) Center focus point, AI Servo (continuous AF).
2)High speed burst mode.
3) Custom Function 4 set to "3," which puts the AF on the "*" button so that AF is active only while I have the button pressed. While in continuous AF, there is no exposure lock, and the exposure will be set as the picture is taken. This is good because rapid panning across the sky the exposure can change rapidly, as dark trees, bright clouds, or blue sky can be encountered in quick succession. In addition, once I let go of the button, the focal plane stays where it was, so it is easy to pick up the next bird in the same flight path. Also, it allows manual touchup to the focus; otherwise, if the AF were still active manual adjustment of the focus would be defeated.
4) Custom Function 23 (I think): AI tracking sensitivity set to "Slow." This means that once the focus is locked onto a bird, it will not as quickly lock onto a tree or power pole that might pass through the frame as I pan with the bird. If that happens it becomes very difficult for the lens to re-find the bird and refocus.
Only if the sky is clear and it is unlikely to have other objects in the frame that can grab the focus, do I ever use the full 45 AF points as active, and in that case it is frequently faster than using just the center point to find and focus on the bird. However, if you use a large aperture, you might find that the focus point grabbed the bird's wingtip, and the head and eye are not in sharp focus.
With the 100-400, the much-accursed pump-action zoom helps tremendously; I find the bird and center it most easily when at the shortest focal length, then rapidly zoom in on the bird while holding the "*" button, which keeps the bird in focus as I frame it and pan.
If you shoot birds with a tripod, I suggest the Wimberly Sidekick, which is stable enough for the 500mm lens as well as the 100-500, allows the camera/lens combo to be balanced on the tripod, and your panning and tilting is done with no effort.
If you use one of the "super telephoto" lenses (300, 400, 500 or 600mm IS lenses) you can register a focal distance, say, at the bird's nest, and then focus on the bird as it flies. Just touching the special focus ring snaps the focus back to the nest instantaneously.
Something that I've been wondering about and toying with on my own, without definitive results. So I'll throw it out here. I using my new 40D for some pictures of hawks in flight. Mostly from side to side but some coming towards or combination of both. Here's my question, which AF settings are most effective for birds in motion? Is AI focus okay or should I only be using AI Servo? Also, do you make all the autofocus points active in order to get focus tracking or just a single point (center?)? This has bugged me for some time and I'm wondering what the other bird in flight photographers do.