Favourite spells? Ultima is always good, but I'm rather partial to Comet or Meteor myself, especially the multiple hit aspect of it. I think for FFVII, I used the summons more in boss fights than individual spells (well, later in the game anyway - the fight against Schizo means you have to use magic a lot), when I wasn't using the Limit Breaks.
I definitely agree about the drawbacks of using the Draw command in FFVIII. Not being able to level up in the conventional way was a pain (It was a little like that in FFXII - the license board was a nice touch, though). I liked the Materia system for the fact that anyone could just equip it and use it, rather than having a set of spells for each character.
Haste is always useful, too. Oh, and barrier/Mbarrier.
Hmm, spells from other games... I liked the idea of Apocalypse in FFVIII, although you get it so late in the game that it's all but useless. Oil is a nice status spell in FFXII (especially used in conjunction with Firaga), and anything that weakens defence (Meltdown, DeBarrier etc).
On an unrelated note, reading what Quokka and Thaddeus said about chocobos put the chocobo theme music in my head all day yesterday.