I like iTerm, but I have yet to waste enough time figuring how to get display forwarding for remote logins to work, so when logging into remote machine, I drop back to xterms. Here are a couple of tips:
1. From the xterm command line, use "ssh -Y firstname.lastname@example.org" for easy X11 forwarding.
2. The default window is black and white and has tiny fonts. Create a .Xdefaults file in your home directory and give it some reasonable values, such as here: http://lists.apple.com/archives/x11-users/2005/May/msg00112.html