Getting good looking fonts still continues to be difficult on Linux, but I've managed to find a configuration that looks pretty good as far as I'm concerned.
First, grab updated freetype, cairo, and xft packages from this ubuntu forums post. Note, this step is unnecessary for Gutsy. The patches have been incorporated into the distribution packages.
The second piece of the puzzle is some information gleaned from a post on the freetype developer mailing list. David Turner, the author of the lcd rendering patches recommends the use of the autohinter in 'light' mode with his LCD filtering patches. This actually turns out to produce some very nice looking fonts.
Two pieces of configuration are required in addition to installing the updated packages. First, in ~/.fonts.conf:
<match target="font"> <edit name="hintstyle"> <const>hintslight</const> </edit> <edit name="autohint"> <bool>true</bool></edit> <edit name="rgba"> <const>rgb</const></edit> <edit mode="assign" name="hinting"> <bool>true</bool> </edit> <edit mode="assign" name="antialias"> <bool>true</bool> </edit> </match>
This will tell all your fonts to use the autohinter in slight hinting mode, as recommended by David Turner.
Secondly, make sure your gnome font properties match. Go to System -> Preferences -> Fonts, then click on the Details button, then choose Subpixel smoothing and Slight hinting.
Finally, restart your X session, and you should see vastly improved font rendering.