Everyone has a short list of items that can make or break a trip: the essentials. Bird of TravMonkey.com posted her list of 10 Essential Travel Items for Long-Haul. I would agree with most of the items on the list - foam earplugs for example, I can't travel without. You can pick up the soft ones that conform to the shape of your ear at any pharmacy and they can be a lifesaver.
I also second the "sarong" recommendation - it is probably the most versatile thing you can bring with you: blanket, towel, beach mat, pillow, scarf, dress - I've even used mine to create a make-shift bag to carry things.
I also would add to that list a watch. Often, if you don't have an international phone plan, you end up leaving your phone off during your trip to avoid roaming charges. Meaning no device to check to get the time. And on vacation, it's so important to be on time (getting to the airport, during hotel check out, etc).
What about you? What is your MUST HAVE item you always bring on your travels?