Right now I'm at the Web 2.0 Expo in New York (The summit in San Fran is too expensive even though I was able to snag an invitation). The speakers are Charlie O'Donnell from Path 101 and Albert Wenger at Union Square Ventures. Charlie is very much a networker, talks about having a thousand (real) connections on Linked In. He seems like a nice fellow that believes in extreme openness (i.e. anti-stealth). I definitely agree with his thinking on this.
Albert says to do a convertible note with no valuation for angels. Also, do not give out more than 20% equity to angel investors otherwise it will be very difficult to raise any future money. VCs are going to want 20% at least and VCs don't want to end up in a majority shareholder position because they don't want to actually run the business and the goal is to get the entrepenuer working hard for cheap - which only happens if they have alot of equity.
Albert also says to not presume that 'strategic' investors will actually be strategic - these relationships are usually founded on a hope of working together but then the major C-level executive who signed over the money in the first place usually has alot of other stuff on their plate. It's great if you can get that money, but don't think too much of it. Also, strategic investors may scare off future investors if those future investors are in competition with the initial strategic investor - that could cause problems from both sides.
Charlie says that pro rata rights (the ability for investors to increase their investments) are good, and most VC funds don't mind that for smaller initial investors. The problem is if too many people have it, then it becomes a burden to get everybody to sign over their rights on the next round.
Albert is passionate about knowing that the team will need to be upgraded as the company grows. Different types of people are needed for working on a small team of 3 versus a larger 15 person organization. Founders often get forced out when they don't realize this and find a way to get people moved around as the company changes.