The geonames.org geographical database is available for download free of charge under a creative commons attribution license. It contains over eight million geographical names and consists of 6.5 million unique features whereof 2.2 million populated places and 1.8 million alternate names. All features are categorized into one out of nine feature classes and further subcategorized into one out of 645 feature codes. (more statistics ...).
The data is accessible free of charge through a number of webservices and a daily database export. Geonames.org is already serving up to over 3 million web service requests per day.
I’m working on a service for Georneys where Geonames will really come in handy.