I've been using Reference MAnager and EndNote at work and I regularly teach our users on these tools. They're good. But you have to pay for them. This isn't great news for those users who don't benefit from an institutional license.
This summer we gave a short presentation to staff on web based reference management tools - Zotero, Mendeley and CiteULike (as well as EndNoteWeb, which isn't actually free, but we included as it was web based). Each tool seems to have a strong and active user group - as indicated by enthusiastic online forums - and I think people have their own favourites, depending on which they find most user friendly. It's clear though that the developers are constantly responding to user feedback and upgrading the product.
I have to say I don't use the free tools because my work is cut out already with using both EndNote and RefMan. But there's no doubt they are on the ball and offer advantages that desktop based packages don't, such as the ability to easily share references, have an online 'presence' (e.g. in the form of 'groups') and so on. Altogether more Web 2.0-y!
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