I put my rain gear into two categories: stuff I always bring with me, and stuff I bring when it's raining as I'm leaving for my ride.
First, one of my panniers always contains a rain cape. Many of you might call this a poncho, but it's a little different as it's designed for cyclists. It doesn't open up flat like a normal poncho, and it doesn't have armholes. What it does have, though, is a two little loops at the bottom front, on the inside, roughly handlebar-width apart. The idea is that you stick a couple of fingers through each loop and then grasp the handlebars. This keeps the rain cape from flapping up in front of you while you're riding. There's another loop on the back flap, on the inside, and near the bottom, that goes around your waist. This keeps the cape from flapping up in back as you're riding.
The whole thing folds up into a small bag, about the size of a can of pop. Very transportable and always available if you need it. It's good for a light rain, or a heavy rain if you're also wearing rain pants.
I also have fenders on my bike. The sport-cycling-focused American bike industry is famous for not putting things like fenders and chain guards on their bikes, and I found a pair of fenders from Planet Bike that work nicely! They're light and easy to install, and they keep the water from spattering up and giving you a nice stripe along your rear.
When it's raining as I leave for work, I wear a rain suit. These don't have to be expensive at all to get a good one. I have one that I bought from Columbia that was very inexpensive (and I still have it, eight years later). My helmet fits over the hood so my hair stays dry, and it comes in bright yellow for visibility's sake. This rain suit is also good for camping and the like, so it won't just be for cycling. Multi-functional equipment is always nice.
So, just because it's raining doesn't mean you have to stop riding! Gear up properly and you'll be getting your ride in while everyone else is moping about rain-relatead traffic.
People, not speed.