It's not free or that inexpensive if you have a lot of projects but I still figured it's worth mentioning. It's definitely one of the most popular online project management apps. I've used it on a number of occasions and I'm reasonably satisfied but I've yet to find the perfect online project management app. In terms of SMS messaging, I think the only way to do that with this app. is to use an email address (assuming your carrier maps an email address to SMS). Good luck!

Basecamp is a decent choice. If you're looking for a cheaper alternative (i.e. free) you should take a look at activeCollab. You'll have to host it yourself (requires Apache, PHP, MySQL) though.

This might be overkill to a 5 person team. If you are into managing projects using agile methodology. You should definitely check out ScrumWorks (http://danube.com/scrumworks). They have a free version called ScrumWorks Basic. This is a collaboration software where you setup Sprints (~20 working days period) and using iterative process the team achieves its goals. The software (server + db) runs on Windows, Mac OS X and Linux. As opposed to the traditional waterfall methodology whereby you setup tasks with deadlines, in scrum you create features (product backlog). Also in scrum the team is "self managed". Each team member is responsible for estimates, and to update his/her status (via portal). I have been using scrum (the methodology) and ScrumWorks (the product) at work and this is very refreshing and effective method to run projects. Very exciting!