Hey mate, not sure about everyone else but I use Adobe Illustrator and Adobe Photoshop

. Both these programs cost an arm and a leg but *looks around for anti-pirates YARGH!*...you can find safe versions of these on torrent sites etc plus they are generally smaller this way. Btw, dont download the sketchy stuff....shits bound to give you a virus.
Info on the programs themselves is summed up with Illustrator offers a zero pixel rate pretty much....images are super clear and crisp so with the aid of holding the SHIFT key...you can make images that are un-pixeled no matter what the size. Photoshop is the image editor magician pretty much...Manipulate stuff until you can no moar. I preffer to start off with ideas and images in PS and then transfer to Illustrator then maybe back to PS for finishing off stuff.
OH! and theres already some GREAT stuff on the 'fish about DIY graphics. Type in the search area "Graphics" or something similair and you'll find a ton of info

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Goodluck with it all and post pics when you figure stuff out haha!
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