If you are into this stuff, Araxis Merge is also worthy of consideration. It does a better job of char-by-char diffs than p4merge, and will recalculate the diffs after you manually edit the result.

The (old-ish) version I used had only 3 panes, though, making p4merge superior for 3-way merges. p4merge was easier to use from the keyboard, too. But for ordinary merges, I much preferred Araxis.