Possible Duplicate:
What software is best for GUI design?
Which is the best way to create Icons, Buttons for Mobile Application development ?.
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Sign up to join this communityPossible Duplicate:
What software is best for GUI design?
Which is the best way to create Icons, Buttons for Mobile Application development ?.
The best way? Use Photoshop (preferred) or Fireworks.
There's quite a few questions on graphicdesign.stackexchange.com on the topic. A search might help you out.
I usually use Adobe Fireworks to create icons, buttons even website prototype. You can export it as PNG or any format you like. The best part; it is in vector format so you can resize your icons/button to bigger size.
For the actual creation of the icons, there are huge amounts of tutorials and content just a simple Google away. Googling for 'icon creation tutorial photoshop' yields literally millions of results.
For the actual creation of the *.ico file, I am a fan of GIF movie gear. A bit dated, but it allows you to fine-tune your *.ico to include different resolutions, transparency and colour depths. Importing *.pngs from Photoshop or elsewhere is a snap, too.