Many of the tools below are opensource or freeware, which makes them ideal for the budget concious. To make things even better, few of these applications have an equal that doesn't cost hundreds of dollars, and most are very easy to use.<!--break-->
MapTool
Great tool for running your games digitally, whether local or over the 'net. You can prepare all of your encounters ahead of time, and even post/share your entire adventure/campaign.
Inkscape
Free SVG based vector drawing program that is great for map making.
GIMP
Whenever you need to edit images, GIMP is your tool.
OpenOffice
Draw is excellent for making maps, Writer is great for all your campaign documents, and Calc is useful for tracking all sorts of things, including characters.
Dundjinni
A great mapping tool, the forums are a rich source of premade maps for many campaigns.
Campaign Cartographer 3
The improvements over 2 are significant and learning this tool is very worthwhile if you intend to make many detailed or expansive maps.