Which software for guitar has the best distortion effect?

Do you mean a plugin/standalone software or do you want something that is inclusive with a Digital Audio Workstation? As far as standalone/plugins I've used Amplitube 2 and it sounds incredible. Very convincing. I've heard rave reviews of Guitar Rig as well with the exception that it'a resource hog. If you're looking for something that is included with a DAW Tracktion bundles Amplitube Uno with their Tracktion Project Bundle($99). You can download Amplitube Uno for free here:
http://www.amplitube.com/MainPhp.html?NewsDisplay.php&Id=398

I've seen Amplitube LE on clearance for $50.

thanks, I'll definately check that out, sounds like just what I was looking for

I'm looking to purchase software for recording and mixing guitar, and I wanted different people's opinions on which software has the most realistic (sounds more like an actual amp) and best sounding distotion feature.

If you've played through a tube amp, or even a decent solid state or hybrid amp, they all sound artificial. Gimme a 57 up against the grille any day.

Now that I've spewed that useless bit of opinion, I've had the best luck getting usable and interesting sounds with Amplitube LE.

After that comes Simul Analog's Guitar Suite: http://www.simulanalog.org/guitarsuite.htm
This is a free collection of amp sims and pedals. The '69 twin sim is actually pretty nice for clean sounds

Fretted Synth Audio puts out several free amp sims and guitar triggered synths that are fun to experiment with: http://frettedsynth.com/

Voxengo Boogex is another free amp sim with cabinet emulation that can give you some suprisingly interesting sounds. http://www.voxengo.com/product/boogex/

All of the sims I've mentioned above can be useful, and can give you some really nice guitar sounds. Just don't expect them to sound like tube amp miked up and moving real air.

I'm sitting right next to a tube amp and I much prefer amplitube. GR is pretty cool as well but more for the spacy/experimental sounds. For conventional sounds I prefer amplitube, espescially for the bluesier tones.