I second Daniel Bleisteiner's motion: "It depends."
For 90% of projects, consider my vote for paper. Justification for paper abounds on this thread, so I won't re-iterate.
Design is never the same among projects, and certainly not among clients. (I speak of design in the vaguest sense, i.e. design, development, prototyping, wireframing -- let's be honest, they're all gradually merging with each other.)
So, for the other 10% of projects, the protoyping tool will depend on the project. If it requires long-distance collaboration, Axure may be best. If it requires working with a client's internal team who use primarily Adobe, Fireworks may be best. There are many tools. Unfortunately, by definition, tools cannot adapt as quickly as the problems they are built to solve; hence, many of these products seem very similar, but not quite identical, to each other. And it is up to us to do evaluate which is best for the job.
Additional thought: the iPad is starting to help blur the lines between in-person client collaboration vs. in-person client watch-you-over-the-shoulder. Omnigraffle, SketchBook, TouchDraw, Draft, and other iPad apps are paving the way for an improved collaboration experience. (I speak of improvement as working towards the ultimate goal of having a client feel just as comfortable drawing on an iPad as they do on paper, the advantage of which being that the client could be using a functional protoype instead of a static page. That ultimate goal is just my opinion.)