What's the best method and product to use for patching cracks in plaster walls?
I don't own a house with plaster so please take this advice with a grain of salt... 

As you pointed out, the cracks usually appear due to settling.  As a result, you ideally want your repair technique to be resilient against future movement. As far as I know, there are 2 main ways of doing this: 

Method #1: For smaller cracks, fill them in with painter's caulk (latex caulk).  Because it's a latex compound, it will (supposedly) expand and contract with the crack. It also makes cleanup a breeze. 

Method #2: Use a joint compound specifically made for plaster work, tape over the crack, and apply additional swipes with larger blades to smooth the look.  The technique is described here: http://www.askthebuilder.com/B38_Plaster_Repair_-_Cracks.shtml (the author suggests drywall compound but as Niall pointed out, it's better to use other compounds). 

-M