Even though I've concluded that the standard way of handling initiative is flawed and a group initiative system is better, I'd like to briefly cover some of the options for dealing with the standard initiative system.
In the first game I played in, one of the players kept a list of the characters on a small whiteboard, and kept track of initiative with little numbers next to each name. This is adequate, though there's a (very) slight delay every time you look at the board and do the math to figure out what number comes after 4 or whatever, and try to find that number on the board. It was the initiative-keeper's job to announce whose turn it is and who's up next.
In that particular group, this system was much improved when the initiative-keeper got an iPad, and the iPad initiative app, which is much cleverer. You sort the characters into proper initiative order, then you push a button after each player goes, and it moves that player to the bottom of the list. An easy, simple visual representation of how soon your turn is.
When I first started DMing, I used initiative cards (which, being a cheapskate, I created and printed myself). You put everybody's name on little cards, and write whatever initiative they rolled in one corner, and then sort them into order. After each player goes, take their card and put it at the bottom of the pile. These are handy.
Because I didn't at the time have any of the books or a laptop for consulting the SRD, I had to print out all the monsters I was going to use in condensed statblock form, so their statblock just joined the pile as their initiative card, as well as the place where I tracked how much HP each one had.
The downside of this system is that the players never know when they're going next. And the cards I printed were all different sizes, so sometimes people would get lost in the shuffle.
When I got a laptop, I started increasingly switching over to completely paperless DMing. Because I no longer printed out the creature stats, I didn't automatically have an initiative card for each one, so I had no reason to keep this system.
So, for a while, I flirted with the technique of keeping the list on the big whiteboard behind me. I usually play in classrooms nowadays, and as long as I have the whiteboard markers out, I might as well use this vast empty space of whiteboard for something. This introduces an additional problem, in that I always sit facing away from the whiteboard (for various reasons involving being surrounded by D&D paraphernalia), so I have to turn around to see who's up next. Plus, I really should have designated a player to keep the initiative, doing it myself is a bottleneck on the whole process.
Then, for a few weeks, I switched to keeping half-cards with each character's name folded over the top of my DM screen, sorted into order. There was a gap the width of a card or two between the card of whichever character is currently going and the card of the next character up. When it's your turn, your card crosses the gap. At the top of the order, everybody's cards go back to the other side. A slightly more intuitive visual display, where you can tell who's up next by who's next on the screen.
I probably would have stuck with that method for awhile, cumbersome though it is, if I hadn't decided to switch over to the group initiative system.
A side note, on the subject of initiative: if you're playing with group initiative, it turns out that if you run on "each group goes on the highest initiative rolled by anybody in that group", the PCs will go first nearly every time.
Consider this addendum: in any given group of NPCs, one of them took the Unreactive flaw (-6 initiative) and gave his bonus feat to another one, who took the Improved Initiative feat (+4 initiative). This should mix it up a little without significantly altering balance.