I use Milkshape 3d ($20? USD) for making models, Lithunwrap (free) for creating the UV map, Ultimate Paint (an old free version) for textures and Irfanview (free) for a few other graphic related things.
As you can probably tell - I haven't spent a great deal on this stuff which is fine for me - I make games as a hobby not as a commercial venture so my own poor graphics don't bother me too much.
Oh..I also use (g)iles for lightmapping which is also reasonably cheap.
Edit: After becoming sick of making extremely poor graphics I purchased creature creator and made much improved character models (still very poor though) which is quite expensive.
As you can probably tell - I haven't spent a great deal on this stuff which is fine for me - I make games as a hobby not as a commercial venture so my own poor graphics don't bother me too much.
Oh..I also use (g)iles for lightmapping which is also reasonably cheap.
Edit: After becoming sick of making extremely poor graphics I purchased creature creator and made much improved character models (still very poor though) which is quite expensive.