Xfig does the job for me, it just takes a bit of 
time getting used to. Haven't tried Dia or Sodipodi yet,
but they also look promising.

As far as equations in figures go, I use psfrag:
http://www.ctan.org/tex-archive/help/Catalogue/entries/psfrag.html
It lets you replace any text in the eps figure with any 
latex code with some ERT in the figure float in Lyx. 

The only drawback with psfrag is when you want PDF output: 
you have to do the latex->dvi->ps->pdf route, which means 
no hyperlinks. I don't think you could do pdflatex or dvipdfm.
I wish that someone could prove me wrong.

Milos


-- 
Milos Komarcevic
Photonics and Sensors Group
Cambridge University Engineering Department
Trumpington Street
Cambridge  CB2 1PZ
UK

Tel: +44 1223 339762
Fax: +44 1223 765268
Email: [EMAIL PROTECTED]

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