Custom ROMs can offer greater speed, useful tweaks, additional applications and more flexibility than the stock ROM. They can also have new bugs. They require you to flash your phone's firmware, which can possibly damage your phone, even though it is very unlikely.
As far as which one to use, just pick one that has the tweaks and features you want and try it out!
Personally, I've been using Juggalo_X's ROM for some time now, and I must say it's much better than the stock ROM. It's stable, fast and easy to flash (even for a beginner). The current version is here:
http://forum.ppcgeeks.com/showthread.php?t=49341
Good luck!