I have used Dia with great success. One feature is that it is cross platform, so people who don't use Linux (many corporations and some of my clients) can also use it to view/create diagrams in Windoze. It comes with several pre-defined libraries for UML, flowcharts etc which makes it easy to produce standard business or technical diagrams.
It creates postscript (amongst other formats) which can be digested by LyX. It also supports many fonts so the text looks quite reasonable. Pete
