It seems the latest version of PHPEclipse 1.1.8 is not yet compatible with the latest version of Eclipse (3.2.1). However, it is compatible with version 3.1.X of Eclipse. Along with this version of eclipse, you will need to download:
JS2E 5.0
DBG PHP Debugger (matching the PHP version you are using)
Eclipse Web Tools Platform Project 1.0.X
Then you can download the PHPEclipse through the Help -> "find and install..." and "Search for new features to install" feature, selecting the remote site of http://phpeclipse.sourceforge.net/update/releases as the update site.
For downloading the Web Tools Platform for version 1.0.X, manual installation is required. The Web Tools Platform has several required projects that must all be installed for proper operation. Each WTP build is built and tested with specific versions of these "prereqs" (see the Requirements section on each specific build's download page) and it's recommended that only those versions be installed and active when used with a particular WTP build. The WTP download page for each build details the complete list of requirements and provides links to download the supported versions. Downloading and unpacking each should place its contents into a folder named eclipse.
Unpack the Eclipse SDK
Unzip the Graphical Editor Framework (GEF) into the same location
Unzip the Eclipse Modeling Framework (EMF) / XML Schema Infoset Model (XSD) / Service Data Objects (SDO) into the same location
Unzip the Java EMF Model (JEM) from the Visual Editor Project into the same location
Unzip the Web Tools Platform build into the same location
WTP should now be installed. Launch Eclipse with the -clean option one time to ensure all plugins are detected properly.
