BILLDOUBLEWIDE  I still use over terminal.app. Why? Two reasons: 1) iterm had tabs before terminal, so I got used to it and it's shortcuts, 2) ability to set "characters considered part of word" in mouse preferences. This allows double clicking on a path or url and getting the whole thing all at once. Sounds like a little thing, but it is one of those little things that makes life so much easier.

I don't understand the transparency issues, perhaps that was with an earlier version. I like being able to turn transparency on and off command-U (or setting a bookmark with always off). More convenient than terminal.app, IMO.  
(Version 0.9.6.20090209)

NAOH  Just a quick query about what this application is capable of.

Is it possible to connect via a serial connection and modem?

I still have a lot of devices which must be managed via serial connections. Because of this, I'm still using ZTerm, which hasn't been developed for quite a few years.

I could do with an alternative and am hopeful that this may be it.  
(Version 0.9.6.1012)

SW_TESTER  i've been using iTerm for a while. works great! thanks the developer for their hard work.  
(Version 0.9.6)

HIHI  If I update iTerm to 0.9.5.0915. I'll lost all my preferences. I'm using 0.9.5.0517 and Leopard 10.5.4. In fact I cannot update to any later version than 0.9.5.0517.  
(Version 0.9.5.0915)

FREEBSD  iTerm Resurrected!!   
(Version 0.9.5.0902)

BUBBAMAC  iTerm is stable than me and still has some of those missing features that Terminal left off (most notably the tabs change color if activity happens in a hidden tab).

I'm sticking with iTerm. Thanks for continuing development on this great app.   
(Version 0.9.5.0902)

BROCK SAMSON  Ok, I'm officially finished with this application.

Nice features, but it's just not stable, and no updates in over a year.

Macbook Pro 2.16

10.5.2  
(Version 0.9.5)

TEORIC  This terminal allows using normal keys (Page-Dn, End etc.) in fullscreen terminal apps (vim, mutt, mc, etc.); overall the keyboard feels more adequate (coming from Linux/FreeBSD, I have to admit). Apple Terminal can be configured(!) to allow this for most keys, but it does not work well for me (10.4/10.5). Therefore, iTerm is often the first application I start and the last I quit.  
(Version 0.9.5)

MADALU  I tried iTerm for a day or two. In theory the features were very nice--tabbed browsing, full-screen mode, etc.

But in practice, iTerm was intensely frustrating. Apart from the annoying transparency issues mentioned in a previous comment here, the biggest problem I encountered was iTerm's speed. (I ran it on an 800MHz G4 iMac.)

I don't quite understand how an all text program can be less responsive than, say, an image-heavy app such as Preview or Safari. The keys felt very slow, and there was a noticeable delay between typing and screen response. Turning off anti-aliasing helped a bit, but not much. Switching tabs was also surprisingly slow--slower than switching tabs in my favorite web browser Camino.

Likewise, when running the email-client Mutt, there was a noticeable delay when redrawing the screen for each new message. (The messages are stored locally, so the delay is not due to remote access.) In a very unscientific test, I tried iTerm side-by-side with Terminal.app using Mutt and the latter won hands down in redrawing the screen.

If you're looking for speed in a terminal app, go with xterm (or uxterm for UTF-8 people). Lightning fast! No delays at all in redrawing the screen in Mutt.

You'll need to install Apple's X11 package. When you first open X11, you get a really crummy looking terminal. But this can easily be changed by modifying the xterm line in the .xinitrc to something like the following:

uxterm -fg black -bg LemonChiffon -fa 'Monaco' -fs 12 -geometry 80x40 -tn xterm-color &

You get a yellowish background in this instance with an anti-aliased Monaco font. (WARNING: Some of the antialiased fonts look horrendous in xterm.)

For different colors see the following guide:

http://mkaz.com/ref/xterm_colors.html  
(Version 0.9.5)

DWAGNER  The transparency that cannot be permanently turned off was a showstopper for me, before I even got to the point of trying to run anything in the terminal.   
(Version 0.9.5)