A Packet Sniffer is a program that can record and filter network traffic on a machine or network switch.
Most of these programs (on Linux at least) use the pcap (Packet Capture) library.
Snort includes packet sniffing capabilities.
tcpdump(8) is a command line sniffer.
Handy Hint: If you are on a "small footprint" machine, where you have access to tcpdump, but not ethereal, you can use tcpdump with -w filename, and then load filename into ethereal on another machine for a more detailed analysis.