Susan Harris at Sustainable Gardening had a great bundle of information about rain barrels, which had me thinking about ours.
A couple years ago we made our own rain barrel. It's nothing fancy, to say the least, but it does the trick. We shied away from the cost of a new, fancy-dancey one (although they are a great way to go if you can), and made one out of an old cider vinegar barrel. (Eden Foods is just down the road from us.)
Our drain spout dumps right into it, and the top is simply open. I just dunk the watering can in, fill it, and water away. We took care of the mosquito concern by getting a couple goldfish. They spend the summer swimming around, eating mosquitoes and whatever else lands on the water. Winter is spent in a fish bowl in our kitchen.
Even after a long drought this past summer, the water level remained fairly high. And it was a welcome source for the garden. I mulch pretty heavily, and we try to water late in the day. We're considering adding another this summer to help cover our front yard, too.