Check out http://www.metanetsoftware.com/technique/tutorialA.html
That site helped me infinitely when developing my own collision detection routines. Depending on the amount of available processing power, you can do just about anything you want in terms of collision accuracy. Starting with the least processor intensive:
1) Bounding box: Good for rectangular shapes and quick to boot. All you need to know is the (x, y) position of the object as well as its width and height.
2) Separating Axis Theorem (SAT): Able to handle more complex shapes and is fairly intuitive.
3) SAT with Voronoi Regions (VR): Uses information on which vertex of any given polygon is closest to in order to reduce the total number of computations.
All of the above is explained in-depth in the above link. It should be noted that, thus far, the methods mentioned are most effective for convex polygons. If you wanted to go into absurd levels of accuracy, you start moving into things like bitmap testing which is horrendously slow and generally overkill for almost anything.