I've done quite a research on this topic. I needed something powerfull enought to handle our projects, but simple enought to keep the additional overhead for the developers within the limits.
So my favorite is: Mantis
http://mantisbt.sourceforge.net/mantis.php3
We are using it for more than a month a have very good expirience. See what the author says about his product:
Mantis is a php/MySQL/web based bugtracking system. The software resides on a webserver while any web browser should be able to function as a client. It is released under the terms of the GNU GPL.
Mantis is free to use and modify. It is free to distribute as long as you abide by the distribution terms of the GNU GPL.
I also have the URLs of couple more systems. If you are interested, I could place the here.
Have fun