its a two- tiered approach - water resistant shell, and a compact waterproof.
the water resistant shell you wear 80-90 percent of the time in seattle but you ocassionally need a totally waterproof jacket.
some people like barrier fleeces like windstopper but its' expensive. simpler still to layer underneath a quality shell like the MEC super microfit jacket from canadian mountain equipment co-op or a pearl izumi optik or whatever they call their lightweight shell.
then, any any old raincoat for the truly wet days.
i like wool with a shell over top, currently trying EPIC encapsulated fabrics.