Thermostats
The thermostat is a valve that varies coolant flow based on coolant temperature to ensure that the system operates at a fairly constant temperature over a variety of conditions. The thermostat's main job is to maintain a minimum temperature. Beyond that, an engine that runs hot is usually more a function of the cooling system as long as the thermostat is not stuck closed. Most people know that a thermostat that sticks closed can quickly cause overheating, but one that sticks open can also create problems. If engine temps seems abnormally low at slow speeds and climb as speed increases, the t-stat may be stuck wide open. Contrary to popular belief, maximum coolant flow though the system isn't necessarily a good thing--at highway speeds, the resultant high coolant velocity can cause it to pass through the radiator too quickly, limiting heat transfer and causing the engine to run hot. For this same reason, running with no thermostat is not recommended.
Most late-model vehicles (produced since the '80s) use 192- to 195-degree thermostats. Auto manufacturers like these engines to run warmer to ensure complete combustion at idle for cleaner emissions, though many performance tuners prefer to see lower operating temps for increased performance. Lower operating temps also tends to reduce the pressure in the system, and therefore, the stress on its components. The pre-smog-era standard was a 180-degree thermostat for most American V-8 cars, though 160-degree units are also available.
Coolant
Most cooling systems are intended to use a combination of water and antifreeze (usually 50/50), but there are several common misconceptions regarding this mix. First of all, there is no known liquid that can transfer heat more efficiently than water--that's straight out of high school science class. So if your engine is running hot, it's not because it needs less water and more antifreeze; in fact, the opposite could be true if the coolant is mostly antifreeze. But don't convince yourself that you don't need to run antifreeze if you live in a warm climate. The anti-freezing protection offered by such products is only one of their benefits. The other major features are water-pump lubrication and corrosion resistance. Running straight water will rust the inside of your engine, and that rust can plug your radiator. Steel freeze-plugs (like the factory uses) will also rust out much more quickly when exposed to straight water. The lack of lubrication can also claim your water pump in time. If you don't need protection from freezing temperatures, use an additive like Prestone's Super Anti-Rust or Royal Purple's Purple Ice.
The water used in your cooling system really shouldn't be drawn from a tap, since minerals and other contaminants and additives can collect in the radiator over time, building up in the cooling tubes and restricting flow. Ideally, you should use distilled or de-ionized water for purity, both of which should be available at a good hardware store or home center. An alternative is to simply use one of the premixed coolants now available. We recently tried Prestone's antifreeze/coolant in our resident Caprice, which requires Dex-Cool-spec coolant. If your car was originally filled with Dex-Cool (GM cars from '96-on), do not mix in conventional green antifreeze.