Blender

Blender is a free(as in Open Source) 3D Modelling suite, written in C with some C++ extensions and Python as a embeded(I believe) scripting language. Although many people are put off by its interface there are many tutorials out there to get you started. Blender is, in some people's minds, almost as advanced as some commercial programs out there such as lightwave, Maya or 3D Studio Max. It has many cool features such as:

• Fluid Simulation: Not very good for large scale sims but very good at small scale
• Particle Animations: Lots of cool particle effects from boids, to strands(hair/grass/...)
• Mesh modeling: This may be one of the weaker features as there are no n-gons(multi vertex faces) and things like boolean subtraction are very weak, but still a solid system.
• Sculpting: Along with multires it allows you to create some stunning images
• Sophisticated Rendering and Materials/Textures: A variety of procedural textures, and quite customizable materials, including Ray-traced reflection, ray-traced and other transparency, sub-surface scattering, Ambient Occlusion(Approximate and Ray-trace), ect.
• UV-Editing: A very comprehensive UV-Editing tool as well as texturing painting( even directly onto the mesh).

Blender includes many other cool features as well which can help you do things like make games( a game enging), edit video(A non-linear video editor) and more. A new version is being developed and is just leaving the alpha stage, this includes many new features like better/faster sculpting, a new mesh api(this means better modeling and n-gon support), A new Python Script API, many internal changes, Volume Rendering, Smoke Simulation and even more advanced fluid simulation. This new version is called 2.5(the development) and 2.6(the release). You can check out the latest version of 2.5 here:
2.52 Download Page
And look at the development process by joining the bf-commiters@blender.org mailing list, or checking out graphicall.org which shows the latest builds/commits/ect. To get involved in development poke around the development tab on blender.org.

I started using Blender after hearing a couple comparisons between it and a much smaller(but still lovable) 3D Package called Anim8or. At first I thought the comparisons were unfair, but though they may have been slightly stacked the comparisons did show that blender was a far more advanced program. I mucked around in it, quite confused, for a while until I found The Essential Blender. A book(which you can download the text of and browse on the web), made by the Blender Foundation to introduce Blender 2.48(much different from 2.5). The text alone was invaluable, and when I bought the book much later it helped me to understand Blender a lot! I would definitely recommend this book to beginners.

Also just surfing the web for tutorials will help you come up with all sorts of stuff. A very good site that started a while back is Blender-Tuts which is a listing of many tutorials around the web. BlenderCookie is another website which has very comprehensive tutorials, although they are all video which can be a show stopper for low bandwidth users...

I hope this has helped you all to understand blender a little better. :D