We have 4 developers sitting in a room with a giant white board. When someone discovers a bug, or one is reported to us, we write a few words or a sentence up on the board; enough so that we'll be reminded what its about. When a developer decides to fix one of the bugs, they stick their initials next to it and check it off when completed, which signals to someone else that it needs to be tested and erased.

The goals of our bug tracker are to get bugs fixed and tested quickly, with the main goal of having no known bugs in the system. Specifically, we realized that most tracking systems are optimized for bug archival, whereas we wanted a system which is optimized for getting the bugs fixed, given our environment.

I've found that I have a very strong preference for an empty bug-tracking whiteboard, and the more items on it, the more I feel compelled to fix bugs rather than work on other things. It's great for communication, because you can just go talk about the item on the board. Even the process of marking something off on the board makes everyone else peripherally aware that something changed, so nobody has to check whether there's something for them to fix/test - they know. Often bugs are fixed and tested within the same day they're discovered. If something stays on the board for a while it's obvious to everyone that there's a more serious issue that we need to discuss.