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So I'm trying to get into making my own terrain, and the only hurdle I've yet to overcome is picking out a foam to use for things like hills. I got some of that floral craft foam and it was very crumbly and hard to work with. What do you prefer? Does the material you use have any downfalls? What kind of terrain have you made with it?

The best foam for hill terrain is the insulation foam that comes as slabs or boards. It's relatively hard compared to the floral stuff, and stands up to handling a lot better.

Floral foam and expanded polystyrene packaging foam can work as space-fillers under a more resilient shell (plaster, styrene cladding, etc.), but, as you've found out, they're pretty much garbage, on their own.

As Kilkrazy said, extruded polystyrene foam insulation board is generally the weapon of choice. It's reasonably priced, sandable, carvable, stiff, lightweight, and the faces are surprisingly resilient, especially if coated with glue, sand, paint, and the like. It's not bulletproof, though - corners, especially, are liable to compress and chip with rough handling. Some people like to add thin MDF or styrene (plasticard) bases, even to hills (can be made seamless, with a bit of careful sanding), to help take the brunt of the wear and tear off of the more fragile edges of the foam.

Being a styrene foam, though, you can't spray it directly with most aerosol paints/adhesives. Some people have also reported difficulty finding it (or can only find thinner sheets) if they live in more temperate climes - it is insulation, after all. Sanding, rasping, etc. tend to get messy, as well - static makes the foam dust cling to EVERYTHING, so keep a vacuum handy. That's about all I can think of, in terms of problems with the material. By and large, the pros heavily outweigh the cons, which is why it's such an overwhelming favorite.