My favourite cover is by Pyogenesis (A lousy band indeed, but the cover is great.) and it's Toto's "Africa".
They made it jungle, with some really heavy guitars. It's hilarious.
And Diablo cover of Abba's "Dancing Queen" kicks ass. I just don't know if it's on the record, but it was on their demo. For you who don't know, Diablo sounds a bit like In Flames.
Also great are Nirvana's "Smells like teen spirit", covered by Tori Amos (!)
and of course "Mr. Sandman" covered by Blind Guardian!