Buddypress is a great plugin (and to say it’s just a plugin is to demean it somewhat) that was originally built for WordPress Mu installations, but the new version 1.2 now works with standard WordPress installations as well. I’ve used Buddypress to build a site I started called PodcasterTech.com and really like the community functionality and built-in forum feature.
With the update to 1.2 also a new default Buddypress theme is released, and I immediately switched over. The new default theme was exactly the look I was going for when I installed Buddypress and tried to squeeze out of the old default theme. The new version is also easier to install and increases the social interaction features with greater support in the activity pane. It incorporates some twitter like features like @username support.
Download it and try for yourself at Buddypress.org