Open Office
An excellent Open-Source office suite, which is available for free (though donations are welcome).
This will open and edit all Microsoft Office formats correctly for most users - very complicated documents occasionally cause problems, but not often.
Note: If you set OpenOffice's default save formats to Microsoft Office formats you don't need to worry about incompatibilities with your friends, school or office.
Note: this doesn't (as of version 2.3) open Microsoft Office 2007 formats. As of my knowledge, nothing except office 2007 does yet.
AVG Antivirus
This is a free antivirus package. It, in my experience, is more reliable and better on detection and removal than most.
It, by default, updates daily if you have an internet connection and runs a daily scan in the background (not slowing down your computer over-much like some competitors (Symantec, I'm looking at you here...))
The Gimp
This is a very comprehensive image-editing suite for Windows. It is open-source, and free. It uses a multiple windows approach, and has every feature almost any user might need.
Note: It's as complicated as photoshop - don't think you can just install it and create masterpieces.
Mozilla Firefox
This an excellent web browser. Much better than Internet Explorer in terms of speed, security, and also extensability - extensions are available to modify and extend all manner of functionality.
Ad-Aware
This is a good anti-spyware program. Again, it's a free program like AVG which is provided by a commercial vendor. Ad-Aware is a very good package for dealing with those spyware programs which show you popups, track your browsing, hijack web pages and capture your personal details.
Note: This is a passive program - you have to scan your computer with it yourself. If you ignore it, it will not slow your computer in any way (which an anti-virus program does) but also won't help.
SuperAntiSpyware
This is similar to ad-aware, and I've had to use it on two computers recently to remove spyware which hijackthis didn't show up, AVG, ad-aware and Spybot S&D didn't detect. It's again free, and seems to be very good so far.