CommNet is an integrated modem dial-up and telnet client for Windows. It's one of the few telnet clients available that offers full support for Zmodem transfers. Zmodem support allows files to be uploaded and downloaded from a local site while in a telnet session, effectively eliminating the need for a separate FTP client in some cases.
For those looking for a bit more security when telnetting, Radient Software offers a companion client, Secure CommNet. The $39 Secure CommNet adds Secure Shell (SSH2) support with six types of encryption algorithms: AES256, Twofish, Blowfish, Triple-DES, Arcfour, and Cast-128.