I don't use AVG... twice it has detected false-positives with Folding@Home data files (causing loss of data or resulting in a locked F@H program), and once it failed to catch a real trojan that I suspected I was infected with.
Until very recently the free version of AVG did NOT scan for spyware or adware, only the pay version used to offer this. AVG has since changed their free program within just the last few months to include spyware scanning/detection.
For AV testing I've started monitoring VirusBulletin, interested users should just read about them directly than me trying to explain it. They require a subscription for monthly content, but release most testing data/results semi-annually.
Here's their last detailed release:
http://www.virusbtn.com/news/2008/09_02
Their more recent (brief) update:
http://www.virusbtn.com/news/2009/03_23.xml
I couldn't stand Avast's nagware when I tried to use the free version, so I ripped it off my latop pretty quickly... During one of my visits to the family my sister was using her laptop to take a timed online examination for one of her courses. In the middle of the test Avast popped up a window that refused to be minimized, moved, or closed and overlapped everything on the screen. The window required it either be uninstalled or purchased immediately, and had one of us clicked the link to purchase I am sure it would have opened a new browser window (likely using the window with her test in it). I was able to finally uninstall it but it cost her 5 minutes of her exam time.