[pcowans]

YouTrack (http://www.jetbrains.com/youtrack/index.jsp) is my favourite out of everything I've ever seriously used. Physical cards stuck to the wall also works well for small, co-located teams.

The important things are that someone needs to put a decent amount of time into managing the bug list, and you need to be actually willing to devote appropriate resources to fixing them (or better still, eliminating the root causes). If those aren't present you'll just end up with an unmanageable dumping ground regardless of where it lives.