PuTTYcyg is a patched version of PuTTY that, in addition to telnet, rlogin, ssh, and serial connections, can also be used as a local Cygwin terminal instead of the Windows console or xterm. See README.txt for more information.
PuTTYcyg may require a recent version of Cygwin. The current version (20091228) supports only Cygwin 1.7. PuTTYcyg version 20071202 works well with Cygwin 1.5.
Problems? Please file an issue after reading the (very short) FAQ and the (very short) README. PuTTYcyg is actively maintained and supported (as of 2010-02-12) so please file issues here rather than trying to find support somewhere else.
Thanks go to carl.johan for the spiffy icon!