Liquid Smooth ROMs

The folks that made the popular now have a nice Liquid Gingerbread (based on Android 2.3), which is in beta. LFY and LGB both start with cool boot animations, which you can select and customize. Liquid has several slick custom themes that change your icons and some of the system colors, too. It uses as its default home launcher, which is my favorite replacement home. LFY and LGB are both extremely fast (though LFY is faster at this stage, and far more stable). They come with a kernel made by Slayher (1GHz for Droid), which makes LFY easily the fastest out of the box among the ROMs I've tested. The app called Liquid Tweaks lets you change your ROM settings. The Liquid ROM offering is still not as feature-rich as Cyanogen (though LGB is getting closer), and it may not be as stable, but it's quite good.

Other popular ROMs include Simply Stunning (by ChevyNo.1), Ultimate Droid, and Lithium Mod, but many others exist. GEM ROMs (such as Sapphire) were very popular, but their developer has left the project to work on Cyanogen development, which is a major coup for that group.

A ROM theme is a pack that you download and install over your current ROM. It typically changes a lot of the colors and icons, and sometimes the sounds as well. It doesn't really add any functionality (in fact, it may slow your phone down some), but it does spice up your handset a bit and give it a fresh look. You can download some themes directly from ROM Manager; more often, though, you'll find a link in the forums, download it, transfer it to your SD Card, and install it with ROM Manager or via your custom recovery.