I have been using notepad for html ever since I first tried using HTML. It is what works very well for me. I have been using Dreamweaver for the first time within the past few weeks. [I am taking a Web Design Class right now] I write all of my own code.. but using the live view is a great function. It also allows you to keep MUCH better organization of your website. Which is really helpful when you have a lot of stuff on your site. Woo!
When I first started out it was purely notepad (actually i used a free text editor called textpad .. but same thing) and photoshop/illustrator/flash for artwork. HTML at first then went to PHP & MySQL
Now that webdesign is more of a hobby then a means of income I get lazy and use dreamweaver or just use portal sites like postnuke for the quick template and tweak everything else manually.
I use dreamweaver, but not any of the fun features that come with it. I use it for site organization (I like the folders on the left), as well as for the FTP upload and syntax coloring. I also like some of the auto-complete for html and intellisense-like behavior for php functions. Use Fireworks or photoshop for graphics.