I'd say your best bet is the scale, the mirror(or better yet a digital camera), a tape measure and some handy bodyfat calipers. The problem with the scale is that it can be severly misleading due to hydration levels. Go on a CKD, lose 10 pounds the first week and become a true believer. Unfortunately 8 of that is water and you're fooling yourself...
Bodyfat calipers are your best bet to gauge actual skinfold measurements because if they are consistently shrinking then fat is being lost regardless of what the scale says.
A tape measure is great tool for waist and limb measurements. Visceral fat cannot be measured with calipers and we know scale weight is misleading so waist circumfrance measurements are good for tracking overal fat loss.
And last but not least the mirror. I personally hate the mirror as it is personally hard for me to see change over time. Because the change is gradual you become accustomed to the new look rather quickly and in a since it looks as if you aren't changing. However if you could see yourself in the weeks prior it it becomes easy to notice the subtle, yet very noticeable changes. This is where a digital camera is priceless. If you took pictures every couple weeks for your entire diet you'd be amazed at the changes that you won't notice so easily in the mirror.
If you are a data freak and love to track things then I suggest setting up a spreadsheet in excel to track all of the measurements I mentioned. This way you can not only track weight loss, but also muscle loss/gain which is just as important. For instance if your arm circumfrence measurement got smaller over a two week period yet the skinfold did not change it would tell you that you've lost muscle but not fat. If your skinfold got smaller and your arm size increased you'd know that you gained muscle and lost fat. You could setup one of the many bodyfat % equations(7 site, 9 site, etc...) and along with weight and circumfrence measurements you could setup a nice trend chart that tracked each one independantly. It could muscle loss versus fat loss and how they effect eachother. Over time you may find that as your fat loss reaches a certain point that muscle loss increases substantially, or more important find the point that gives the best speed of fat loss with least muscle loss. The sweet spot if you will.
Personally I only take an abdominal skinfold because it's the last place most of us lose fat. If that skinfold is shrinking then the others are as well. At first that skinfold measurement won't change as fast since there is more fat to lose in other areas, but as you get leaner it will change more rapidly. My general rule is if my abdominal skinfold and waist circumfrence are consistently getting smaller while my legs/arms are staying the same or ever so slowly shrinking then I'm ok. If I'm losing size on my arms faster than my waist then I'm doing something wrong. Keep in mind that refeeds and overall glycogen levels can effect muscle size so ensure that measurements are done consistently. Meaning don't do the first week before a refeed and the next week's after. I prefer to measure everything the morning of the refeed before I eat anything. I also tend to take my weight after the refeed to see just how much glycogen I was able to store.
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