One part of: The Ultimate Server Guide
This guide is part 2 of the ultimate server guide. For all other server stuff, check out the ultimate server guide. Includes: Making a server, using plugins, great plugins to have, stopping cheaters and griefers, and a noob's guide to permissions!
How to install plugins on your Bukkit server
Too long, can't be bothered to read version:
1 Find plugins on Google or by searching on bukkit.org
2 Download the plugin and put the jar file in your server's plugins folder
3 Use Notepad++ to edit the configuration files
One option is to Google for recommended Bukkit plugins. However I think searching for them is a slightly easier and more effective way:
Go to bukkit.org and enter your search terms in the search bar in the top-right. Look through the first few pages of results and open some which look like what you want.
In the forum thread title there should be a build number e.g.  indicating build 1337 of Bukkit. It is best to try to use plugins that were specifically made for the build of Bukkit you are using. To check what build you are running look in the first few lines of the server window when you start it, or type '/version' in-game. At the end you should see something like '-b1337 jnks' meaning you are on build 1337.
Downloading and Installing
Download the plugin from the forum thread you found above. Usually you just put the jar file (and any other files there) into the plugins folder in your server. However check on the forum thread you downloaded it on for any special installation instructions. Run your server, and usually it will create some additional files to allow for configuring the various settings of the plugin. Close your server by typing 'stop' in the server command window, or '/stop' in-game. Now move onto configuring the plugins:
In your plugins folder you will usually have the .jar of the plugin and also a folder for that plugin. Open the folder and you should have one or more text files, most of the time you will want to open 'config.yml', but some plugins have a few files for editing different settings. You can open them with something like notepad or Microsoft Word, however I highly recommend you download and install Notepad++
. It greatly helps with formatting and especially if you are editing permissions files.
Updating your plugins
In your plugins folder make a folder called 'update'. Place the new jar you downloaded into the update folder. It must be the same name as the old version of the plugin you are replacing. Type 'reload' into the server window, or '/reload' in-game. This replaces the old jar in your plugins folder with the new jar in your update folder.