The secret to a good line following is to have a good sensor. In UTM ROBOCON, we have tried many kinds of sensors.
The first type is IR transmitters and receivers with operational amplifier as comparator. This is the most basic and simple type of line sensors. But this is also the most vulnerable to noise and light intensity changes. It is good to use this under florescent lighting but in spot light, not too good. And this sensor cannot cope with different floor colours. This page provides example of a comparator circuit.
The second type is industrial grade sensors. A good example is the FX301 digital fibre sensors. This type of sensors could easily be obtained from Cytron. This sensor is very common in the recent Malaysia ROBOCON 2011 game. Few teams uses RGB sensors that can detect multiple colour. I think it is a product from Keyence. This sensor is more robust than a IR sensors. The limitation of this sensor and the IR transmitter is that they only provide digital data. In other words, the line position was given in binary.
The third type is a phototransistor / photocell / photodiode sensors. This sensor is very similar to the IR type but the data was fed directly into microcontrollers. Well, this is a bit of history regarding this sensor. It was initially developed in UTM ROBOCON 2009 where the old version uses photocell. Of course there are some limitation in photocell compared to phototransistors or photodiode. Development was halted in UTM ROBOCON 2010 but in 2011, it was revived back. Now with phototransistors version.
With the data directly fed into the microcontroller, line position can be obtained using self designed algorithm. We have tried fuzzy logic and it worked just fine. The advantage of this sensor is they can provide a continuous line position value compared to the first two type. But this sensors is not without disadvantage. They are hyper-ly sensitive to spot light.