Don't use SHA1 or SHA256, as most other people are suggesting. Definitely don't use MD5.
SHA1/256 and MD5 are both designed to create checksums of files and strings (and other datatypes, if necessary). Because of this, they're designed to be as fast as possible, so that the checksum is quick to generate.
This fast speed makes it much easier to bruteforce passwords, as a well-written program easily can generate thousands of hashes every second.
Instead, use a slow algorithm that is specifically designed for passwords. They're designed to take a little bit longer to generate, with the upside being that bruteforce attacks become much harder. Because of this, the passwords will be much more secure.
You won't experience any significant performance disadvantages if you're only looking at encrypting individual passwords one at a time, which is the normal implementation of storing and checking passwords. It's only in bulk where the real difference is.
I personally like bcrypt. There should be a Perl version of it available, as a quick Google search yielded several possible matches.