One of my favourite programs is Audio Hijack pro from rogue amoeba software. You can use it to easily record audio from iTunes, Skype, a DVD playing or external equipment such as microphones.
With its classy UI it is easy to get to grips with and operation is simplicity itself. It features ID3 tag editing, VOIP recording (Skype & iChat), an Application Mixer to capture audio from more than one application source and can be used to digitize your records and tapes. You can edit your captured audio to remove sections of audio, split your audio tracks and use auto stop to cease recording when silence occurs.
You can also use it to produce podcasts and save in MP3, AAC, Apple Loss;ess and AIFF formats. Yu can easily organise your audio using the Recording Bin feature, send your recordings to iTunes and use AppleScripts to customize your workflow. It is compatible with hundreds of VST and AU plugins, has over 50 built-in effects and precise level meters, VU meters and menu bar meters.
Winner of 5 Mice from Macuser UK, it costs just $32 and is available now from rogue amoeba here.