Ya the adwords tool is great to tell you the amount of traffic a certain term got over the last month. I also really like http://www.google.com/insights/search/# which will tell you the popularity of a keyword over a longer period and http://www.seoserp.com/web_tools/goo...ps_checker.asp which will find your website for any given keyword and tell you the position in the SERPs.
If you are looking for free keyword tool, then go for Google's Keyword Tool External. However, the paid ones like KEYWORD ELITE is also a good consideration.
Well google Analytics is a vey good tool which I use for Keyword analysis too.
It shows almost all keywords by which users visited our site. check out for mostly used ones and also the bounced ones. From that you can derive your best keywords. Try to optimize pages for those keywords.
Also try to findout keyword with 4-5 words in it. Google likes keywords with more word than 1-2 letter ones !