I use Blender. Current version, 2.43.
Blender is a very powerful 3D Modeler, with the ability to be custom expanded with Python programming. It also has a very powerful game engine added into it, which can be programmed to its full potential. My knowledge on Python is fairly low at the moment, but its enough to take a 3D Character, and rig it to be able to walk around and such in a simple game. (Which I hope to do with Magus)
For textures, digital art, wallpapers, sigs and avatars, I use photoshop. My current sig and avatar were made over a year ago, when I only had Photoshop 5 LE. Now I got CS2 and once I finish my Magus model, will be making a sig and avatar with him in it.