Oddly enough, I just use MS Paint and the Windows Photo/media editor thing. It's ridiculously basic, but in a pinch that serves well enough. Iconning is, at it's most basic, cropping and resizing, and then maybe adjusting the colour and brightness some. Obviously it's not much good for anything fancier than that though.
I've a friend who also uses a program called Photoscape which can be downloaded online.