Measuring your traffic is a key part of your business, in determining all aspect of business, from conversion rate to referrals, affiliate tracking, and finding out the success of your SEO effort.
Generally there 2 forms of traffic reporting;
Server side log file analysis
Packages like awstats which do log file analysis on the server will provide basic reporting functions to you. They are fairly reliable and comprehensive.
Client side javascript based tracking. i.e. Google Analytics.
GA is a great choice for your business intelligence. Its constantly evolving, integrating with other google products, and its free. Its really worth the effort to do some extra tracking with GA, especially if you are interested in conversion rates and PPC tracking. From the smallest websites to massive dotcom empires, they are all using GA. If its good enough for them, its good enough for you.