WinRAR
A newer version of WinRAR is available.
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Full user review
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"Best I've used."
Pros
I've been using WinRar for a few years now and I don't think I've been disappointed by one aspect.
WinRar has full support for ZIP and RAR archives as well as unpacking support for some of the more less common archive formats such as CAB, ARJ, LZH, TAR, GZ, ACE, UUE, BZ2, JAR, ISO, 7z and Z.
WinRar also comes with an SFX creator which allows the user to create a self-unpacking EXE program from your RAR or ZIP file just in case those relatives you're emailing don't have WinRar.
The SFX creator also has some great advanced features that programmers may enjoy for creating simple installers for their programs.
Packing and unpacking times are faster than other programs I've used. Files that compress easily like wav or text files of any kind will pack quite quickly. Files that don't compress very much tend to take longer at the same settings.
For Example on a 2gHz AMD Sempron on the "Best" compression setting:
100mb WAV file compresses to 60mb in 30 seconds
100mb PSD (Photoshop) file compresses to 90mb in 3 minutes.
WinRar also has support for themes. What I find interesting is that when you change the theme, it also changes the default icon for an archive files in Windows. A plus since I think the book icon is kind of ugly.
It supports 128-bit AES encryption for RAR files and ZIP's proprietary, but less secure, encryption for ZIP files.
Cons
WinRar is shareware. After the 40 day trial period there is a nag screen you have to click on every time you open the program but it maintains full functionality. Annoying, but if I weren't a broke college student I'd pay for it.