Terminal.app definitely still has problems in Snow Leopard; especially the lack of 256 color support. I've switched to using iTerm2, a replacement terminal emulator, and it's solved most of my complaints about Terminal.app.
Hopefully Lion rolls a lot of those fixes into Terminal.app.
In fairness it took until Leopard (as I recall) to support tabs and still doesn't support 256 colors. (It will in Lion apparently.[1]).
[1] http://www.apple.com/macosx/whats-new/features.html#unix