Recs.
Updated
iTerm2 is a replacement for Terminal and the successor to iTerm. It works on Macs with Leopard, Snow Leopard, or Lion. Its focus is on performance, internationalization, and supporting innovative features that make your life better.
Gives you split panes, search, autocomplete and a heap more very useful features.
SpecsUpdate
Pros
Pro Split Panes
Divide a tab up into multiple panes, each one of which shows a different session. You can slice vertically and horizontally and create any number of panes in any imaginable arrangement.
Notice how inactive panes are slightly dimmed so it's easy to see which is active.
Pro Any key can be mapped to any function
Using the Preferences Menu, you can set up hotkeys to map virtually any action you can think of to a single key or a combination of them. This is extremely helpful as it allows you to use shortcuts to edit commands you are typing in the terminal and while most terminal emulators have shortcuts for this sort of thing, few of them let you define your own.
Cons
Con Not necessary
No compelling reason to install an alternative terminal app, just complicates setup.