I'll chip in for Guitar Guitar in Epsom. I called in on the way back from Gatwick to check out some guitar gear (Egnater heads, TC pedals), and they were happy to let me sit in the booth and try what I wanted without hassling me. After I decided that Egnater was [i]not[/i] for me, I had a wander round the Gibsons and got talking to another staff member who clearly knew what he was on about. Also their returns system is very efficient if kit you've bought suddenly dies on you!
Over the years I have also spent a fair few bob at PMT in Oxford, and always got good value and service. It's been a couple of years since I visited so I don't know how they are now.
If you are looking for a first instrument, you could do worse than come to my home town of Swindon. There are 3 independent music shops (Kempsters, John Holmes, Rock'n'Roll) that all do loads of entry-level kit. The downside of this for me is that I now have to visit other towns to find stuff I am interested in!
Denmark Street gets a lot of stick (not least because most of the shops belong to one company), but two of my favourite purchases ('57 RI Strat, '62 RI Precision - both fiesta red!) came from Regent Sounds. Both times I dealt with Crispin - he is a roots'n'rockabilly aficionado with appropriate hairstyle!
A final thought - if you are in serious purchasing mode, it is usually best to avoid Saturdays. That is the day for penniless teen wannabees to practice their metal riffs and mangled RHCP licks on gear they can't even afford the case for. I once was that teen, but if you are planning a serious spend, go on a quieter day when you can enlist a staff member's help for your quest.