Blender

Blender is an open source (free) 3D Modeling package that can be used to create static and physics props. Although XSI is the Valve-recommended program for modeling, some will find Blender to have an easier learning curve. The free version of XSI for Source modeling has some limitations and watermarks images.

See also

Is Blender 3D Good for Source/How to Start

Modeling props with Blender

Official Website

Blender 3D: Noob to Pro wiki