There are a lot of Premium Icon Editors you could use, but if you look deeper there are FREE Icon Editors that are just as powerful (in some cases more so) as premium versions, easier to use than Photoshop or Illustrator, and can create amazingly polished professional icons.
1. IcoFX 1.6
Features: Support for Vista icon with PNG compression; Create icons for Windows 98 / ME / 2000 / XP / Vista; Support for Mac OS X icons; Convert Macintosh icons to Windows icons; Create icon libraries; Create favicon for websites or blogs; Easily convert images to icons; Add, change or delete icons inside exe files; Support for transparency (alpha channel); Batch processing for import, export and extract; Multiple language support; More than 40 effects + custom filter; Resolutions up to 256×256; Data types: 2, 16, 256, True Color, True Color + Alpha; Extract icons from 32 bit exe and dll; Import and export images; Transparent, Brighten/Darken, Blur/Sharpen tools.
View: This is by far the the best Free Icon Editor, with its feature list seemingly endless and the quality of the end product pheneomenal. Recommended.
Features: Create and edit icons in either standard or custom sizes, in color depths up to 16 million colors. Standard icon sizes are 16×16, 32×32, 48×48; Make icons with transparency; Make icons for Windows XP in 32-bit color depth with 8-bit alpha channel; Paint images with pen, brush, airbrush, ellipse, rectangle, line, curve tools; Roll, shift and rotate images; Import and export .ico, .png, .xpm, .xbm, and .icpr formats; Sort images inside icons; Copy and paste images to other applications; Test icons.
View: Strictly speaking this isn’t free, but you do have a 30 day free trial. Overall this is an excellent editor, not as good as IcoFX, but very powerful and professional all the same.
Features: Create & Edit Small Sized Icons (16×16); Create & Edit Standard Sized Icons (32×32); Scale Icons to different formats; Convert PNGs to icons; Create & Edit Windows XP formatted icons; Right click on images from Explorer and convert to icons; Convert images from clipboard (copy & paste) into icons; Create & Edit Very Large Sized Icons (48×48); Create & Edit any sized icons (any resolution, up to 256×256!).
View: There is also a premium version from Stardock which offers a few more features, the free version offers enough to make it a very good good editor. The interface looks amazing, making it the easiest editor to use.
Features: This hasn’t got as many features as the rest, but is a great little icon editor, that will create basic icons. This would be great for the novice designer.
Features: Easy to use, lightweight, requires no installation (portable); Supports file drag and drop; Has multilanguage support (included: English, Chinese, French, German, Hungarian, Italian, Japanese, Korean, Norwegian, Polish, Portuguese (Brazilian), Serbian, Spanish); Help also available in French, separate download; Click here to help us by translating the program; Sample documents are included; Uses dynamic color depth; Opens and saves in ICO, CUR, ANI, PNG, XPM, BMP and JPEG formats; Can create icons and cursors up to 256×256 @ 32-bit, which can also be PNG-compressed for use in Windows Vista(tm); Can create animated cursors; Can handle images up to 1024×1024 and larger; Can extract icons and cursors from executable files and icon libraries; Can batch convert image files to icons, or to another image format; Has advanced selection handling (marquee, lasso and wand tools, saving/loading selections from files); Offers various gradient styles for filling shapes; Lots of filters including Remove matte, Drop shadow, Inner/Outer glow and Bevel.
View: The interface isn’t as polished as IconDeveloper, not as easy to use as the rest (thats why I haven’t got it at Nu.1), but my god look at the feature list. This is an editor for the pro.