Brad,
Someone else asked this question as well. Most of the people who have posted images of this type use Adobe PhotoShop. There are other tools around that do similar things, but PS is without doubt the premier program of this type. Which is just as well, given its price-tag
If you go to somewhere like
http://download.com, you will find there are stacks of Image Manipulation tools out there, like Paint Shop Pro, GraphicConverter, CorelDraw and so on. Even MS Paint that comes with Windows is theoretically capable of this sort of thing, but you'd be really doing it the hard way with that POS.
The other thing worth bearing in mind is that most of these tools have a considerable learning curve. If you have access to PhotoShop, make sure you get the CD with the tutorial on it as well - it is an excellent primer on what you can do with the software.
Hope that helps,
RET