Using Joomla! 1.0.1x, comment out the line in includes/frontend.php in function mosShowHead:

$mainframe->addMetaTag( 'Generator', $_VERSION->PRODUCT . " - " . $_VERSION->COPYRIGHT);

Using Joomla! 1.5.x, EITHER

comment out in

\libraries\joomla\document\html\renderer around line 84

or

add to your template's index.php file (within php tags)

$this->setGenerator('Whatever you want the Generator text to say - alternatively leave blank');