I have been using the Eclipse PDT (PHP Development Tools) plugin for ages now, and in my opinion it is the nicest way to work on PHP code. A major new version has been released recently, check the link below for details on the improvements and new features:
Updated 2021 : note that the above post is from 2009, but is left here for archival purposes. PDT 2.0 is now outdated of course, but you can download the latest version from their home page: https://www.eclipse.org/pdt/. Frankly speaking however, I no longer use Eclipse so I have no idea how active that project is now.