For my current situation, I am building a station in LEO with fuel tanks, and large hab modules to act as sort of an orbital space port (eventually for an Arrow, but I have yet to come up with a solution on how to dock that thing to a space station.)
I at the moment fly mostly the XR2 to it.
I have the attitude hold on the station via the CMG set up that the primary docking port is facing forward, just like the Shuttle's old docking port on ISS.
I do rendezvous with Rendezvous MFD which allows me to get to the station on the V-Bar, right underneath the station. At this point, I use Attitude MFD, under velocity mode, and set pitch +90. This will make me fly, relative to the earth, with my nose pointed straight up.
Then I get close to the station, about 300 meters or so. Then I use Attitude MFD to TORVA, to go from the V-Bar to the R-Bar and get infront of the station, then use Attitude MFD to set my attitude (again velocity mode) to pitch +180. Now I am on my back facing the station. Now my attitude is aligned perfectly with the docking port and the only thing I have to worry about is staying centered on the port and close in. The "X" and the corrsponding arrow will always be nice and aligned.
Now in my case there is an extra step. The docking port is rotate, so I must roll +90 to align the arrow.
If you are flying a dorsal docking ship, like the XR5 or the Space Shuttle, then when approaching on V-Bar your velocity mode attitude hold should be 0-0-0 for p-r-y, and then when your perform the TORVA manuver to get infront of the station, you will want your pitch to be +90, then translate toward the port at a nice slow and steady rate.
That is how I do it, and it works very very well. Docking is a breeze when using the CMG and AttitudeMFD. (wow, that rhymed)