I use Redmine (<a href="http://www.redmine.org/" rel="nofollow">http://www.redmine.org/</a>) on a VPS (RimuHosting). Pretty easy to setup even for a Java developer who's barely looked at Ruby or RoR (like me).
This question has been asked before: you might have a look at the archives. I use Redmine, github's thing, Google code... depending on the project. It doesn't matter all that much. If you want something in-house, Redmine or Trac are both ok.
FogBugz: <a href="http://www.fogcreek.com/FogBugz/" rel="nofollow">http://www.fogcreek.com/FogBugz/</a><p>It's free for students and startups and has a lot of extras: wiki, discussions, etc...
<a href="http://www.bitbucket.org" rel="nofollow">http://www.bitbucket.org</a> (because I use mercurial as my SCM, and bitbucket is fast, cheap and solid)