The most useful thing I've learned about .gitconfig is that you can define custom diffs for arbitrary filetypes (including binaries).

FYI, this needs git 1.6.5 to work properly (or at least newer than 1.6.0, I'm not sure which specific version)

Works on 1.6.1 but you need to change the %Cyellow to something else, this version only supports red,green and blue

Better yet, just use Tig. http://jonas.nitro.dk/tig/