We did a TON of research on this topic early last spring. We thought about several options:
1. Trailors like the Chariot or Burley. We opted NOT to get one of these because they're big, very expensive (like $350-$400 by the time you get everything), and we heard that your kid often gets dust in his face and can't see that well anyway. My sister found one for around $90 - I can't remember the model. They decided that even if it was cheap and broke, they could replace it 3 TIMES before they'd paid as much as one of the expensive ones :) I think they like it.
2. Behind-the-seat bike seats. We opted NOT to do these because it's hard to balance the bike, they're sort of expensive (around $100-$150), and your kid can't see anything anyway.
3. In-front-of-the-seat bike seats (two models are the ibert and the "wee-ride"). We bought a wee-ride. Bike balance is great because the kid's weight is right with you. They can see because they're in front. You can see them so if they're crying you can figure out what, if anything, is wrong. Disadvantages are: weight limit (wee ride is 40 lbs I think... ibert may be more like 35). You cant use these with a road bike - you need to be sitting up a little more. If you're very short/small framed, you may have trouble fitting the seat on your bike. YOu may need to splay your knees outward when you ride.
All in all, though, we're pretty happy with it, and our son LOVES it.
Good luck with your choice!