TFS Express gives all the power of Team Foundation Server for up to 5 users. I like TFS - it's not perfect by any means, but it extremely powerful and I've seen it used effectively on teams as small as 3 and as large as 60.
It's got nice web interfaces for Agile / Scrum type projects and traditional waterfall.
- Native Visual Studio integration
- Continuous build & integration
- Integrated work management, easy to correlate project management artifacts from request to requirements through development, test and deployment.
- Good integration with Microsoft Project and Excel for more robust PM activities and portfolio management
- Really good release management in the newest version