Off the Beat: Bruce Byfield's Blog

Monospaced fonts are defined by having letters and spaces of equal width. Today, they are rarely used except for command lines displays and for specialized uses such as media scripts because they are associated with typewriters and are rarely as elegant as the serif and sans serif fonts that become popular with the rise of the word processor. In fact, in some cases, monospaced fonts do not have the resolution for typography.
Free licensed monospaced are no exception. Still, if you search, you can almost certainly do better than the clichéd and downright ugly Courier.
Bitstream Vera Sans Mono

The Bitstream Vera fonts were among the first free-licensed fonts. Their characters have little white space around them, making them much arger than the characters of fonts that are technically the same size. One the one hand, none of the font family will ever be mistaken for beautiful, but, on the other hand, they are by far the easiest to read. The Mono version is no exception.
Inconsolata

Inconsolata ws the first font designed by Raph Levien, a part-time designer of free fonts. It avoids the distortion of many monospaced fonts by having well-rounded bowls and broad curves at the top and bottom of upright letter strokes. As a result, it is one of the few monospaced fonts that can be used successfully for body text.
Oxygen Mono

The Oxygen family is the official font for the KDE desktop environment. It differs from its companion Oxygen Sans mainly by having wider spacing between letters. Even so, its spacing is tight enough to classify it as a condensed font. You wouldn't want to use it for body text, but it is suited to either the command line or the desktop, although it can seem cramped at font sizes less than 12 points.
Droid Sans Mono

Designed by Google, Droid is a font family designed for tablets and phones. In the illustration, it appears at 12 points so it can be studied, but its low ascending strokes and short descending strokes make it very easy to read at 8-10 strokes.
Ubuntu Mono

Ubuntu Mono is part of a font family for desktops and terminals. It is perhaps the least successful of the family, but if you want a darker font for easier reading, it is a possible candidate. For other purposes, give it more space between lines or between characters.
Cousine

On of the most common monospaced fonts is Courier New, which is as ugly as any of the fonts simpled labeled Courier. Cousine is a metrical equivalent of Courier New, which means that, although the characters may have different designs, they occupy the same space as Courier New's. Such a metrical equivalent means that you don't have to worry about using non-free fonts. In the case of Cousine, it also means that you can use a somewhat better-looking font.
Other choices
Going through this list, you may have noticed that many of the fonts listed are part of a family, with matching serif and sans serif fonts. These families are a trend that has emerged in the last few decades, and has the advantage of offering already-matched fonts for those who lack the confidence to make their own matches.
You might also notice that many fonts on the list are Sans Serif -- that is, without hook at the tops and bottoms of character strokes. The reason, I suspect, is that monospaced serif fonts often use large serifs to keep the spacing between letters regular. In most cases, sans serifs with curved lines are likely to look less clumsy.