I have learned my lessons from my first outing and am definitely participating in the second ludum dare. My tool set is similar to last year, though it has expanded a little:

Code:

• Love2D – Game Engine
• Notepad++ – Code Editor
• Mercurial – Code Revision
• Bitbucket – Code Hosting

Graphics

• Inkscape – Art

Audio

• Audiotool – Music
• sfxr – Sound Effects
• Audacity – Audio Editing