I started out using notepad, however it really does depend what kind of website you are looking to create. The trouble with coding websites in notepad is there is slim chance that it will validate in HTML and there is no chance at all it will validate in CSS as you will most probably be using tables which is an out dated method and if you are using tables you will be applying the styles directly to each section which gets messy and complicated.
I use Adobe Dreamweaver CS3 now and once my design is completed I get to work coding the site from scratch using a tableless layout (no html tables) using div tags and a separate styles.css file. It's a little complicated at first but once you get the hang of it you can create up to date, professional websites correctly that will validate in HTML and CSS. Here's the tutorial I used to learn how to do it...
http://www.vineyardesigns.com/resources/dreamweaver/div_css_site.shtml and you can check your pages validation here...
http://validator.w3.org/ It is possible to create a tableless layout using notepad but it will be a lot more complicated as you will have to keep more files open at the same time. The main advantage of tableless layouts and a linked CSS file is that you only have to apply the styles to the layout once.
Here's one of my tableless layouts I created for myself but never got around to finishing it...
http://www.iansalter.co.uk/new/ it's based on a similar design as you might see but it was all designed and coded from scratch. The file structure is index.htm containing the div tags, links and text and there is a separate file named styles.css containing the type face, layout styles, link effects, type colors etc.
Drop me a message if you need a hand with anything.