FUSION/LDV is a powerful and solid open source option developed by the USDA Forest Service to analyze and visualize LiDAR data. General information about FUSION can be found here:
Overview of FUSION features:
- Generates DEMs from point data
- Produces bare earth surfaces from unfiltered points
- Displays image data for background reference
- Subsamples large datasets
- Provides in-depth metrics for LiDAR point data
- Enables viewing of multiple LiDAR data files at once
ArcGIS 10.1 has additional functionality over ArcGIS 10.0 to handle LAS datasets and visualize point clouds. Here is a link that talks about the integration of ArcGIS 10.1 and FUSION/LDV for Forestry purposes.
The new functionality provides an efficient method for multiple users
to access, explore, and download lidar point cloud data. In addition
10.1 provides users the ability to visualize point clouds within ArcMap, examine 3D profiles, and interactively edit individual point
An excellent screenshot from the above link showing Arc's profile view of point cloud data:
Additional information on using lidar datasets in ArcGIS 10.1 available here.