LiveReload works wonders with Drupal.
Drupal 6 is compatible with every version of LiveReload.
Drupal 7 requires LiveReload 2.0 β3 or later to handle @import's correctly. Earlier versions of LiveReload need livereload Drupal module to handle @import's correctly (LiveReload 2.0 β3+ does not require that module, and we encourage you to disable/uninstall it).
A feature we have in mind for the future is “live database monitoring”: make changes in your site admin, see the effect immediately. Be sure to let us know if you're interested!