Allows you te set a page to be used as the 404 page. In order for the plugin to work you need to make some modifications to the <code>404.php</code> file in your theme. I set it this way so that the 404 page could be formatted to fit the theme, or can be set more dynamically.
For more information and sample code: http://www.reitzdesigns.com/2010/08/dynamic-404-page-wordpress-plugin/
Although this plugin will work with WordPress 2.8, it’s better suited for version 3.x.

Dynamic 404 Page

Allows you to select a page to use as the content of your 404 page.

michaeltyson

Leon Stafford

Save your visitors from unhelpful 404 errors!
Instead of quickly giving up when a visitor reaches content that doesn’t exist, make an effort to guess what they were 
after in the first place. This plugin will perform a search of your posts, pages, tags and categories, using keywords from the requested 
URL. If there’s a match, redirect to that content instead of showing the error. If there’s more than one match, the 
404 template can use some template tags to provide a list of suggestions to the visitor.
See the <a href="http://michael.tyson.id.au/smart-404" rel="nofollow ugc">Smart 404 homepage</a> for more information.
<h3>Template tags</h3>
<code>smart404_has_suggestions</code>
Returns true if there are some suggestions, false otherwise
<code>smart404_get_suggestions</code>
Retrieve an array of post objects for rendering manually.
<code>smart404_suggestions</code>
Draw a list of suggested posts.
Pass the parameter “list” to render suggestions as a list.
<code>smart404_loop</code>
Query posts for use in a Loop. Eg:
<pre><code><?php smart404_loop(); ?>
<?php while (have_posts()) : the_post(); ?>
 <h2><a href="<?php the_permalink() ?>"><?php the_title(); ?></a></h2>
 <?php the_excerpt(); ?>
<?php endwhile; ?>
</code></pre>
Note that the loop will not display pages correctly, as it is not built to support them. It is recommended that if you use 
a loop like that above, do not enable searching of pages.
<code>smart404_get_search_terms</code>
Retrieve an array of search terms used to populate the suggestions list, for use with contextual highlighting, etc.
For support and latest source code, please visit https://github.com/leonstafford/smart-404

Smart 404

Automatically redirect to the content the user was most likely after, or show suggestions, instead of showing an unhelpful 404 error.

Dynamic 404 Page vs Smart 404