Epic Games Gore-master, Pete Hayes, talks with Gamespot about his role as senior artist on Gears of War 2. In the article he talks about modeling guns, vehicles, and gore.
I basically create a little stockpile of chunks of meat and bones and things along those lines. Then I figure out where the character has to be chopped up or blown apart for gameplay purposes. Obviously, with a chainsaw, you have to have cuts in certain places. Then I just try to make it look cool. It's not anatomically correct by any means whatsoever. There's lots of "mystery meat" in there.
The goal is not to gross people out or have super-uber-realistic gore. It's more just for the type of action game that we are and [to have] that over-the-top exclamation point, much like profanity would add an exclamation point to certain comedy routines. It serves that purpose.