TeX uses \abovedisplayskip
and \belowdisplayskip
for the spacing above/below equations. There's also a short version of the former two commands for paragraphs ending/beginning with shorter lines. Here's an example showing the difference:
\documentclass{article}
\usepackage{amsmath}% http://ctan.org/pkg/amsmath
\begin{document}
Text text text text text text text text text text
\begin{equation}
1 + 2 + 3 = 6
\end{equation}
Text text text text text text text text text text
\begin{align}
1 + 2 + 3 &= 6 \\
1 + 2 + 3 &= 6
\end{align}
\setlength{\belowdisplayskip}{0pt} \setlength{\belowdisplayshortskip}{0pt}
\setlength{\abovedisplayskip}{0pt} \setlength{\abovedisplayshortskip}{0pt}
Text text text text text text text text text text
\begin{equation}
1 + 2 + 3 = 6
\end{equation}
Text text text text text text text text text text
\begin{align}
1 + 2 + 3 &= 6 \\
1 + 2 + 3 &= 6
\end{align}
\end{document}
The same effect is obtained with/without a modified \baselinestretch
- it is just clearer when viewed without that set. Of course, you can modify these lengths as needed.
Edit: Heed @egreg's suggestion and/or @Mico's answer regarding two equations