I've been using Microsoft's Visual Web Express and I love it. My favorite feature that it has is the auto code format. I press Ctrl + K + D and it formats all my code for me.
Notepad. I had Dreamweaver bundled with my computer, it is great but you need to understand the inner workings to use it efficiently.
notepad2...dreamweaver screws html horribly...it adds so much stupid crap and gets the validation all out of whack...
Can't say I have had those problems, the best thing about it is that it integrates the testing of websites very well. Great when you are working on dynamic pages.
I think the best on the market is FirstPage 2006. Not FrontPage but First Page. You can get it here: http://www.evrsoft.com/ Scott
I think it depends on what you're doing. Notepad for basic html stuff is perfect. CoffeeCup Software has some nice downloadables that do the job and don't cost as much as frontpage and dreamweaver.