The beam dynamics associated with second harmonic generation (SHG) is revisited in the light of quadratic soliton formation and related effects such as modulational instability. Here we examine the spatial evolution of the fundamental and harmonic for plane waves (i.e., very wide beams) and for beam widths and/or input intensities characteristic of soliton formation. Because of its attractive symmetry properties, a noncritically phase-matched geometry was used for experiments in LiNbO3 slab waveguides utilizing both birefringence phase matching and quasiphase matching. The physical mechanisms which lead to changes in the spatial profiles of the optical beams interacting through the second order susceptibility are discussed. For wide beams, breakup was observed due to noise on the input beam in good agreement with theory. For narrow beams, one-, two-, and three-soliton generation was observed at the output. Finally, for beams of intermediate width and at very high input intensities, results were obtained which were interpreted as the transition regime between modulational instability and multisoliton generation.