When you first install Magento the temptation is to go to Magento Connect and look at all the possible extensions. There are literally thousands of them. The next step is to Google things like “best Magento extensions”, or “top 10 ..” or “recommended ….” just to try to whittle down the list to a manageable one. The temptation then is to install some, especially the free ones. This is a mistake.
First look at the date of the blog/forum posting to see when this list was made. It could easily be years old, and refer to a defunct version of Magento. The current stable version is 1.7. Many Magento sites run at 1.6.x. So any recommendation prior to this year is suspect. It is possible that any recommended extension either no longer works or is no longer needed as the core Magento now covers the functions.
Secondly, there is no such thing as a free extension. Every time you add an extension to Magento, you run the risk of introducing more bugs. You add to the work you will need to do when you want to upgrade Magento. Further if the extension has functions you come to rely on, and it is not kept up to date, what do you do when you upgrade?
This is equally true for paid extensions, although they tend to be kept up to date. The trap with these is that many developers only give you free upgrades for a period of time. This means you may have to pay again in a year or so just to keep using the extension when you upgrade Magento.
Finally, just because an extension is recommended, does not mean its right for you. I have seen some lists that include some recommendations that are totally inappropriate for a typical Ecommerce store.
So try to resist using any third party extensions. Try to run your site “out of the box”. Only take an extension if you find that there is a real business need for it and you cannot easily work around it.
Of course this is impossible in practice.
There are must have extensions which tend to choose themselves. For example if you want to take payments from a debit or credit card (and not just use Paypal) then you need to have a payment gateway. Once you have a payment gateway then you need the extension that interfaces between Magento and that gateway. Typically there will only be one. If there is a choice, then ask the gateway for their recommendation, and reasons for that recommendation.
Third party extensions are developed either to fulfil a particular need (for example an interface to a newsletter service, like mailchimp) or because the developer believe that they can do better than the standard function, make it easier to do something, or it adds additional functionality. The sales blurb can be compelling and persuasive, but not necessarily correct for your store.
A classic example of this is the One Step Checkout extension. There are a number of different versions and all say that you get a much better conversion rate than the standard Magento checkout. However if you look at http://www.netmediagroup.com/blog/ab-testing-the-one-step-checkout-magento-extension/ you will see that a developer did A/B testing on one of their clients sites and found a 26% REDUCTION in conversion rate using this one step checkout. The complete opposite to their assumptions. So no matter how persuasive the blurb is, no matter how much you think the extension will help you, you must test it. You must monitor your metrics before and after installing any extension and remove any extension if it proves to damage your sales. Further only add one extension at a time.
I use Magento 1.6.1 and the extensions I find useful are as follows
The Enhanced Product Grid (http://www.magentocommerce.com/magento-connect/enhanced-admin-product-grid.html). I have always used this and cannot imagine trying to administer the products without this.
The next purely admin extension which I find useful is the change attribute set http://www.magentocommerce.com/magento-connect/flagbit-change-attribute-set.html
This allows you to change the product’s attribute set (which Magento out of the box will not). Without it you are forced to delete a product and re add it when you need to change the attribute set. This extension does NOT WORK if you have the enhanced product grid (the extensions clash) however you can get them to work if you are prepared the edit the extension code. See http://www.magentocommerce.com/boards/viewthread/59416/P15/
The above extensions demonstrate how by picking one you have problems with the second. This is one reason why you should be careful what extensions to use. It is annoying if you have one extension which you use rarely, but having it stops you installing an extension that you really need.
I do not like the default Magento image mouseover and magnification. So I install the Easy Lightbox extension. http://www.magentocommerce.com/magento-connect/magento-easy-lightbox.html. There is another similar extension, but this one simply works and does not rely on the Jquery library.
I do my Google product feed using the GoMage Feed pro (http://www.gomage.com/extensions/gomage-feed-pro.html) because it is easy to use and allows you to filter and exclude products which do not have an EAN or UPC. There is now a core Magento feed process which uses the Google feed API, but I find this export/import feed far easier to understand and thus use.
When I was on a VPS and the site was a bit slow, I found that my conversion rate improved when I used the Aheadworks Ajax Cart Pro (http://ecommerce.aheadworks.com/magento-extensions/ajax-cart-pro.html ), now that I am on shared hosting and my site runs faster I probably do not need it, so I will re-test the conversions at some point to see if it should go.
I also use the Aheadworks Blog extension. (http://ecommerce.aheadworks.com/free-stuff/blog.html ). It is a very straight forward extension which allows you to build a blog as part of the store. You can get a wordpress interface and run a full wordpress blog, but this is only worthwhile if you mean to blog every day.
Finally, because I cannot be bothered spending days maintaining a huge shipping table I use the Flat Rate Shipping extension http://www.magentocommerce.com/magento-connect/ig-multi-flat-shipping.html
That’s it. I do not use any other extensions. I have purchased a lot more, but I stopped using them for a variety of reasons, but mainly because I did not need them.