I have found a way of working that is very helpful to me, so I thought I might aswell share it for the benefit of those who have trouble with it.
I don't use HDR (Photomatix in my case) if my image doesn't need it, but often if I shoot the streets in high-contrast sunlight, I do tend to use it.
What I do in order to minimize or even avoid noise, is to shoot the picture using 'expose to the right'. As you may know, half of your digital information is in the far right fifth of your histogram, and another quarter is in the fifth left of that. The last quarter is in the three remaining fifths. So, what you want to do is to expose your picture in a way that as much information as possible is in the far right of the histogram, at the same time avoiding to clip any of it. It's not easy to accomplish, and therefore I tend to make several photos with different exposures, in order to select the best one later on.
Then I generate three to four images from the RAW file: one with the exposure at 0 and two or three each time one stop down. I do not generate an overexposed image, because it's exactly that one that will make your final image look unnatural and it's also the one that will produce noise in the darker areas.
Then I just combine them with shadows&highlights - adjust in Photomatix. If the result is not perfectly okay, I adjust the blending point, and if it's still not what I want, I redo the process, leaving out the next brightest image. It works well for me.
In the image below, the sun was high in the sky, which normally makes for either a well exposed shadow part and a blown out bright part, or a well exposed bright part and a completely dark shadow part. Either way, your blue sky is gone or highly faded.
What I did, was meter on a bright shadowy part of the street, make the composition and shoot. On the camera, the image looks blown out, but I knew I still had all my detail, judging from the histogram. I made three images from the RAW file: 0, -1 and -3 (you have to play with it to see what works, it differs for every picture).
Then I combined them, and below you see what came out of it.
Important remark: if you expose to the right, the resulting image should be your brightest, then generate images stopping down. If you don't have to brighten images, you avoid noise completely. This is very important.
For me, it's the best way to ensure a natural looking image.
If anyone has better ways to do it: I'm all ears, because I realize this is not perfect.
the whole gallery in progress (all HDR) is here:
http://www.pbase.com/simplephotography/ghent