New generation of CAPTCHA: Checkbox Captcha and Honeypot Captcha.
You can use it on Magento forms. It nicely integrates with built-in Magento 1.7 CAPTCHA functionality.
Use built-in CAPTCHA on Contact Form.
By default you can use it on several forms, but not on Contact Form.
You can find a nice explanation on this blog post:
It nicely integrates with Magento 1.7+ built-in CAPTCHA, so you don't even know it is an extension.