Of all of the ROMs floating around out there, Cyanogen is by far the most established custom after-market ROM available.
CyanogenMod 6 brought froyo features to 2.1, and was later updated to 2.2 It was then very similar to a basic 2.2 ROM, so it became outdated. But CyanogenMod 7 brought us a loaf of gingerbread this time around. This has put it much higher up.
In addition to the new faster and cleaner base operating system, CyanogenMod brought some new interesting features to the table.
Lockscreen Gestures
The name says it all. On the lockscreen, you are able to perform gestures that will do different actions, including enabling the flashlight, unlocking the phone, opening a shortcut, or opening an application.
DSPManager
I have really found no use for this quite yet, but others might. It allows you to modify your sound outputs. You can modify headset, speaker, and bluetooth separately, and in each pane you get options for a bass booster, and you also get a nice equalizer that is quite easy to modify. I don’t exactly know why you might need this, but I guess some audiophiles on a higher degree than me might appreciate it.
Themes Support
The operating system comes with a built in theme chooser and three themes. You can download new themes online on many different forum sites (such as xda-developers) and easily install them. One package includes the theming for the WHOLE operating system, including home screen, highlights, menubar tweaks, etc.
Incognito Mode
This feature is rarely used, but I guess could come in handy. Identical to the incognito mode in Google Chrome, this will prevent your phone from saving cookies, history, cache, or anything.
Installation
Installing this ROM was fairly simple, however it doesn’t come with Google Apps built in.
First, go to http://cyanogenmod.com and select your phone, then download the ZIP for your phone and put it on your SD card. Open up ROM Manager and select “Install zip from SD card.” Select the zip of CyanogenMod, then check the box that says “Wipe Data” and the box that says “Backup current ROM.” Continue with your installation and you will be greeted with CyanogenMod. You may notice, however, that there is no Market, YouTube, Gmail, etc. To install those, download the zip for your phone here and then flash it. To do this, transfer the Gapps zip onto your SD card and boot into recovery by booting while holding the down volume button. In the menu that comes up, select Recovery, and wait for it to boot. In the next menu, select “Install ROM from SD card,” select the Gapps ROM, and let it install. Then, reboot your phone, and you will be greeting with a Gapps enhanced CyanogenMod. Enjoy!
[For more info on installing ROMs and rooting, read my full guide here.]