Bottom line: antivirus software is neither necessary nor sufficient for security, but it's still a good idea. It's not a panacea that magically makes you safe, nor is it is obsolete in the face of current threats. As countermeasures go, it's cheap, it's easy, and it's effective. I haven't dumped my antivirus program, and I have no intention of doing so anytime soon.
Schneier on Security: Is Antivirus Dead?
Speaking of anti-virus, I've been using Microsoft Security Essentials since its release about a month or so ago, and its been working great so far.