Depends on what you're after. A lot of software that has nothing to do w/ compression supports ZIP: my GBA flashcart clients for example, so all of my GBA ROMs are stored in ZIPs w/ their NFO's and such. In this case ZIP is best purely for convenience.
LZ7 (7-Zip being one) archivers are what I would recommend for most usage though. Generally better compression and speed for everyday arch'ing over RAR and ZIP in my experience... And as you said 7-Zip is free. Also, I'm running Directory Opus which supports using 7Z files as directories (it also supports RAR & ZIP) so I largely have all the same advantages that using ZIPs does on a Windows box. Most of my ROM's (MAME, GBA, etc) need to remain in ZIPs though as the software I use them w/ doesn't support anything else (DOpus doesn't and can't fix that, it needs to be built into the software in question).
That being said though, when sending a file to someone I usually choose RAR or ZIP as many of them do not have the ability to handle 7Zs. Mostly because they don't know what 7-Zip is and when I try to tell them what and where to get it their eyes glaze over. So I use something like ZIP that is going to work on just about any platform right out of the box. Also some servers will not allow you to upload anything else (because their admins are dumb).
If you want to be a bastard you can use GZip and TAR. >:-)