Coping with the Avalanche of IDs and Passwords?

Bitwick asks: "The number of web sites and other systems I need IDs and passwords for is finally becoming overwhelming. Right now, I tend to use a small selection of IDs and passwords. I know this isn't an ideal situation, but so far it has been the most practical. However, it has become clear to me that this needs to change. I am planning to get a USB keyfob and a password manager to keep track of my IDs and passwords. What experience have you had with password managers? What's good, what's bad, what features are important? Are there other reasonable and secure alternatives?"