If you ask my favorite version control then it is undoubtedly ClearCase. But having any of the CVS/SVN/other server dedicated for version control is an overhead for a startup. There are many free ones available which let you host your project repo. So why not opt for them?
Google code is a very clean option, especially for open source projects. Next question that strikes is do startups work on open source projects? Interestingly the answer is yes. Take the example of online gradebook startup LearnBoost (of course many advantages come attached with 'open source'!). Your code is more visible and searchable. Google Code Search is one of the major contributors to make it searchable. Github is also a good option. It hosts private as well as public repos. There is no hard and fast space limit. Of course the open source projects enjoy the freedom of no space limitation on github. Initially SVN users had learning curve with github since it was built on git. But now the support is extended to mercurial as well as SVN. So yes github proves to be a good option. Assembla is a very good option if the startup is not working on an open source project, which most of the times will be the case! For SVN users this is a very good option. Space limit is 2GB for a workspace, which is much more that what will be usually required.
Many more options are available for startups. Certain points like code review and colloboration can become major decision making factors if that is the need.
Multiple options are driving me crazy....which version control system are you using?