Software simulations can be very helpful in helping students solidify physical concepts in their minds.  While I am NOT an advocate of replacing real demonstrations with computer based ones, simulations do provide a "virtual" laboratory in which parameters can be quickly changed and the consequences of those changes can be viewed immediately.   While there are many software packages (both free and commercial) I have chosen three which are well used, well designed,  and are in active development.  I believe cross platform solutions are preferable and all these packages run on Windows or Mac; additioanlly, the Java and Flash based packages can be used on computers running Linux (my personal favorite!).

1. Interactive Physics (commercial: Design Simulation Technologies ~$250, Windows and Mac)
   Interactive Physics is a nice simulation package becuase it can be used on many different levels.  From simply running the included demo files to building up custom simulations with many components, graphs, and controls.  It's strength is in mechanics and electrostatics, but many topics can be illustrated using these fundamental interactions (e.g. kinetic theory of gasses and current flowing through a real conductor).  I also very much like the real time plots and the ability to dynamically change parameters.
   
   
2. Physlet (free for education, Davidson College, Wolgang Christian, Java based)
   Physlets are Java based simulations and therefore have the advantage of being run over the Web with most modern Web browsers (with Java support installed).   There is a wide collection of simulations available covering just about all areas of physics from basic kinematics to quantum mechanics and relativity.  The "Physics: Principles with Applications" text by Giancolli has a bundled CD with ready to run web pages, but individual simulations can be downloaded for free from the Physlet web site.  The simulations  in general are a bit simple with a few "knobs to turn", but can be very helpful for students to understand the basics of a concept.
   
   
3. Physics Education Technology (PhET) (free for education, University of Colorado,  NSF, Java and Flash based)
   PhET is another Java and Flash based simulation format with the same Web distribution advantages as Phylet.  PhET is a newer development and in some ways is more sophisticated in the graphics and dynamic control of the simulations; however the number of current simulations is much more limited.  There does seem to be active development and you are encouraged to develope new simulations using their tools and submit them. (Actually that's true for Physlet too!)