AVG is good, especially for something that is free (unless you're using the commercial version), and it is certainly better than Norton or McAfee, but you do get what you pay for. The free version only offers base level protection, which is fine is most cases.
Of course most people are going to say AVG is the best; it's free. But if you do want the absolute best protection available, you're going to have to pay a little, which is why I recommended NOD32. I think it's only like $40 a year to use it, which isn't bad.
I'm a cheap bum so I'm only using AVG Free too, I'm just saying it does get a lot better than what it offers, though.
EDIT: Perhaps even better than NOD32 is Kaspersky:
http://www.kaspersky.com/, but it's more expensive.