Well, I actually just use the supplied batch files (e.g. "decompile.bat", "recompile.bat", "reobfuscate.bat") that come with MCP, which are click-and-run with no setup required (MCP says to put the server jar in a folder but it is actually not needed unless your mod specifically needs to run on the server and just slows things down (many "client" mods can run on both since the client runs its own internal server in singleplayer which has mostly the same classes), and use Notepad as my editor, and I'm not talking about small mods either (my main mod, TMCW, is currently over half the size of the vanilla files in terms of file size, and my code has a higher code/total size ratio due to how I format code and comments). I also have some help from Windows Grep (basically a more advanced way to search files than Windows search) to find things (it also helps that 1.6.4 has nearly all the classes in a single location so I don't have to look through subfolders or worry about packages and imports).
Of course, if you are just beginning it may be helpful to have an editor that highlights code syntax and recognizes errors on the fly and such (I pretty much learned how to mod from the ground up, mainly by modifying existing code, which is the best way to mod anyway rather than trying to write everything from scratch unless it is actually unique; e.g. all instances of blocks, items, biomes, and entities share common methods and code structures, while e.g. a block that has a tile entity shares some common code specific to tile entities).