There isn't much I need to change about firefox as its default settings are a lot better than mozilla's used to be. Remember mozilla's default theme looked like navigator 3 which turned a lot of people off straight away. First impressions count, and I think that most of firefox's success compared to mozilla is just from picking sensible defaults. Anyway...

fonts

I much prefer Sans Serif fonts and also I like text smaller than the firefox default, so:

• Select Edit menu - Preferences - General - Fonts & Colours
• Set size to 14
• Set proportional font to sans serif
• Select Bitstream versions of serif, sans serif & monospace

middle mouse paste

I find it really handy to just paste URLs from the selection buffer directly into the browser window.
To enable this functionality if it's not already enabled:

• Type about:config in URL bar
• set middlemouse.contentLoadURL = true

search bar size

I like the search bar, but it's too small by default. To make it larger:

• cd .mozilla/firefox/*.default/chrome
• mv userChrome-example.css userChrome.css
• For firefox 1.x edit userChrome.css to add

      #searchbar {
        -moz-box-flex: 200 !important;
      }
      #search-container {
        -moz-box-flex: 200 !important;
      }

• For firefox 2.x edit userChrome.css to add

      #search-container {
        width: 200px !important;
      }

• For firefox 3.x the search bar is not fixed width, it's a % of total width. And one can easily adjust the % by dragging the "bar" between the URL and search boxes. The default percentage is just about right though, and on my 1280 pixel wide display the size of the search box is also just about right. Well done guys.

navigation toolbar

Also I like to simplify the navigation toolbar like:

• right click the navigation toolbar to customize
• Drag the Go button into the dialog to remove it
• Select "icons only" to remove text

Update: For firefox 2 they integrated the go button with the URL bar so to remove it:

• Type about:config in URL bar
• set browser.urlbar.hideGoButton = true

Update: For firefox 3 the URL bar has no "go" button shown by default. Instead it shows an unobtrusive icon at the right of the url bar only when you type changes. This is the right compromise I think.

offline mode

Since Fedora 11, firefox notices when there are no network interfaces enabled and starts automatically in offline mode. This is very annoying when developing against a local webserver on a laptop for example, as you can't even browse to http://localhost/. So to disable that:

• Type about:config in URL bar
• set toolkit.networkmanager.disable = true

extensions

Currently the only one I use is called fusion, which merges the progress bar into the URL bar (like safari).
Search for the fusion extension by Stephen Clavering.
Update: For firefox 1.5 and later you need to use the newer fission extension

Here is what these changes look like in firefox 1.0.7