There are several aspects to saving and using academic references, and the tools that excel at one thing tend not be so good at another. The stages I identify initially are:

1. capture: If you just happen across an interesting reference online, you may not want to spend much time making notes on what you found and where. So the ideal tool has to have bookmarklets or some equally convenient tool to capture the data from the page you're on and transfer it to your reference store, while linking back to the referring page, with one click.
2. sorting: You need to be able to look through your references and identify a subset useful for a particular purpose. Usually, this will be by tags or keywords, or perhaps by groups or folders.
3. citing/listing: When you're writing, you need to be able to refer conveniently and unambiguously to your sources, using in-text citations and reference lists.

If I had to choose one of those steps as key, I would go for the first one, as I remember on several occasions reading something and not getting round to recording what it was. CiteULike excels in this respect, having a bookmarklet that can read metadata from Amazon, ScienceDirect, Springer, Oxford Journals, Blackwell Synergy, and others. (With all the mergers and joint ventures going on in publishing, the list keeps changing, as the services often change their URL formats; I'll probably do a post just on the topic of coverage another day.) When you add data using this bookmarklet, you're given the opportunity to add tags to aid with later retrieval and sorting; if time is really of the essence, you can skip that step and go back to it later. That leads us to the second stage, sorting references, at which CiteULike is pretty good, allowing you to look at all and only the references with a specific tag, and offering you suggestions when you enter the tags. However, it doesn't yet have more advanced tag management, allowing you for example to merge two similar tags. When it comes to citing and listing, CiteULike is not so useful by itself; most people would probably want to use a desktop tool such as Bookends, Sente, or Endnote.

Judged by the 3 aspects listed above, it's difficult to argue that CiteULike is superior to Zotero, an add-in for Firefox. But CiteULike's extra dimension is sharing, which is something of a killer feature for research groups. CiteULike allows you to create a new group and make it private or public. Once you are a member of a group, you're asked whenever you add a new reference whether you want to add it to your own collection, your group, or both, so maintaining a group doesn't really entail any overhead. You can use different tags for the same works in groups and in your own collection. Personal collections and groups alike have RSS feeds, so you can keep track of new additions without visiting the site. And both have blogs, so you can make CiteULike your communications hub if you wish.

I'll talk about other bibliographic/reference tools in future posts, but I would venture that CiteULike is a good place to start if you don't yet use any tools, or if so far you've only used conventional desktop software.

Of course it's preferable in theory to always save the reference metadata, in case you need to generate a citation in another format. That's why my research group has standardized on CiteULike, which uses BibTeX. But if you're looking at something in LibraryThing and you're in a hurry, the OttoBib option saves a lot of steps.