Blimey, I opened this particular forum for the first time, and this is exactly the topic I wanted to ask a question on!
Before butting in with my own question, I'll have a go at answering yours.
I
hate individual lessons. You're absolutely right about the extra preparation. If you look at a lesson in terms of STT and TTT (student/teacher talking time), assuming that you're interested in a communicative approach, you can make a simple mental calculation as to the amount of input you have to make as a teacher in a group of eight or ten students as opposed to one-on-one. As class size decreases, material consumption goes up almost exponentially. Think about the disastrous situation that we all face- we've prepared a great lesson for a group, and only one or two students turn up. Unless we have an emergency reserve of resources, we're left to ad-lib to fill in the time left after the lesson has disappeared into thin air, which doesn't usually make for good teaching.
A problem with 1-to-1 teaching is that you end up having to adapt wholly to suit that student's wishes, and not just his needs. Some will be happy to go through a structured lesson, others might want 'conversation' lessons. In any case, giving an individual student enough practice for him to digest and absorb new information is a real challenge without the input of other students, and the opportunity to practice with them. You have to make up for a whole class full of students.
I make extensive use of the internet at work, and a good way to make sure your materials are 'fresh' is to use daily news. This allows you to pick topics that your students will be interested in, but the downside is that you'll have to read articles thoroughly and possibly edit them to the student's level. You might also want to remove mistakes, but then you have a nice reading passage edited to your liking, which (if you remove the date

) you can again and again.
This gives you a nice basis for a balanced exercise. You can start by introducing the theme of the news article, asking questions to elicit what the student already knows on the topic, and adding your own views to encourage discussion, rather than just developing a question and answer session (good to play devil's advocate

). You can help with giving useful vocab or phrases for any ideas the student has difficulty expressing. Unless the conversation is flowing particularly smoothly, I would encourage him to note any new, useful vocab.
Suitably primed, you can then move on to reading the article. Stop at the end of each paragraph and ask the student to sum it up in his own words. You can also discuss any interesting/unusual/controversial content in the paragraph. Judge for yourself when it's time to move on to the next part. Although you're using the article as conversation stimulus, there's no reason not to explain individual words or expressions or grammar constructions if the student is interested.
Not all students are keen on this, some will feel that it is too artificial and too much like a 'real lesson' when all they want to do is talk. However, if you're like me you'll feel a lot more like you're actually
teaching them something!