I am planning to use the LPC2106 in a project and I want to know how ISP works. From what I gather it allows you to write the boot sector over serial. Does this require code already be on the chip or is this something hardware takes care of? Example can I buy a blank chip, put it on a board, power it up and program it over serial? The boot loader is only 8KB what about the other 120KB? Can it be programmed through ISP or do I have to write a boot loader to do that. Any help appreciated.
The bootloader is already there. You only need to download the Philips LPC2000 Flash Utility or FlashMagic to send the code to the chip. There is obviously some circuitry that you will have to add if you are making your own board to allow the software to operate the pins on the LPC properly over RS-232. You should be able to look at the schematics of the Olimex prototyping boards (not so much the header boards) to see how to wire them.
Here is a design of mine for the LPC2106 that will give you an idea what you need:
http://www.geocities.com/leon_heller/lpc2104
The Gerber and drill files are provided if you want to get your own boards made
Leon