Before Leopard, I used iTerm, but there was just something about it that I didn't like, but the availability of tabs made me get over it. Now with Leopard there is no need for iTerm any more.
Just to point out that Apple seems to be unable to get anything 100% right these days, there are two flaws in the Terminal's tab implementation.
The first flaw is that you can't easily switch between tabs using keyboard shortcut. All you can do is to use
cmd+}to switch to previous or next tab respectively. What a "wonderful" choice of keys that require use of right hand or both hands. Most importantly, one can't use the handy
cmd+9shortcuts (or anything similar) to switch to one of the first nine tabs. Maybe Apple doesn't want to overload us with new features and is planning to add this to Terminal in MacOS 10.6. :-) Fortunately, the
cmd+}shortcuts can be remapped via System Preferences.
The second flaw is that Terminal doesn't let you name the tabs or configure how the tabs should be named. This is a useful feature that many other terminal applications have, but Apple decided that using the name of the program of the currently running process is good enough. Well, this is what it looks like:
People are doing all kinds of crazy things to work around this issue. Including using hardlinks to change names of programs or creating dummy processes that carry the tab name.
I would be very happy if Apple did something similar to what xterm does - using an environmental variable to set name of the tab dynamically. But I have a feeling that we'll see MacOSX Trash go 3D sooner than properly working Terminal tabs. :(