It's important to have a means that allows you view and update your entire portfolio in a quick and easy to understand way. Not that you need to refer to it every day, but you should be able to gander at it whenever the mood strikes.
There are web-based and non-web based methods, and I use a bit of both. I track my portfolio in two ways – Google Finance and Quicken. Google Finance (web based) provides very quick and efficient access to data and news for stocks I own (or hope to own) and Quicken (non web based) gives me access to my family’s full financial picture.
When I started out I used Excel so I have included some tips for Excel as well. There's absolutely nothing wrong with using a spreadsheet and it's a great way to start.
If you have some methods, tools or software that you swear by, please let me know about them and I will try to include them.