Most people will probably say PhotoShop, but that costs money.

I use The GIMP for most of the stuff that I do, and it's 100% free.  It operates a little differently than some (most?) other image editing/paint programs, but it seems like it has all of the power needed, especially if you are just making sigs.

Paint Shop Pro is also very good, but it's only available as a 30 day trial if you don't want to pay anything.