I have been messing with this too. My current 'system' is a combination of making sure your bike fits. If you are in the market for a bike, find a Trek dealer. They aren't that expensive but the biggest deal with them is that they make different frame sizes and geometries. Their dealers can measure you (inseam, height, arm length, etc) and match you to the right frame.
If not, make sure when you adjust your bike (seat height and height of your handle bars (adjusted using that central pivot point) that when you sit on the seat and put your weight on the handlebars that there isn't too much weight pushing forward. You want to hands to give you support, but to mainly be used for controlling the bike. Also, the angle it puts you in shouldn't be so that your neck gets sore from looking too far 'up' while riding.
For seat height, you want your seat at the position so that your legs are almost (like very almost) fully extended at the very bottom of your pedal stroke. In other words, you want to just about lock out your knees when your legs are at their straightest (which is generally when that pedal is at its position closest to the pavement).
Get those two adjustments down before you do anything else. And make sure your seat is truly straight front to back. I still have my factory hard seat. The shape is right really for guys -- narrow at the front and not too wide at the back. I may upgrade soon to a silicone one just because I tend to chafe from the long distances I cycle (15-30 miles a day). Keep in mind, it's not your ass that is supposed to be supported by the seat. It's actually that hard area between your anus and your balls that should be on the seat (basically the narrow part of the seat). The "saddle" in the back is for leaning back to rest a bit and nothing more.
Now, the seat and bike adjustment is the main ball protection you can do. Beyond that, I have gone to wearing bike shorts with my balls lifted up off my legs and such, and then a pair of gym shorts on top of those. The two layers give me a pretty good lubrication effect and keep my balls from getting squished too bad.