Some of my favourites (looking for more recommendations!).
We're stuck to free apps and games at the moment......
No point in linking to anything since they must be downloaded from the market, so I'll just name them.
Astrid: Great task manager that is very persistant if you keep hitting snooze! Syncs online with Remember The Milk (which is a cool feature)
Lyric Search: Big big lyric search engine (uses LyricWiki) - nice to have, and has already resolved an argument for me......
Notepad: Its a notes app rather than a notepad app, so the name is a bit misleading. Syncs online with Helipad, so you can create your notes online and sync them to your phone.
Taskiller: Nice task killing app. Must contact developer to see if I can buy full version APK from him (full version allows hiding of all system processes)
Useful Switchers: Toggle lots of different things from a single screen.
Quickpedia: Frontend for Wikipedia. Pages are formatted for android, so they are really easy to read with just vertical scrolling, and sections are all automatically collapsed, so its quick to find what you're looking for. Nice feature is the "Nearby" tab, where it lists wikipedia entries related to your location.
Bonsai Blast: Great game like Puzzloop/Zuma. Completely free with lots of levels. Can't believe its free.... very professional game.
Torect Lite: Clever tangram-type game (moving shapes around the screen to make a rectangle). A real time killer.
Coloroid: Deceptively simple game with no frills, but very strategic gameplay. Very small too...