Greenfish Icon Editor Pro
Greenfish Icon Editor Pro has a simple, straightforward interface, and it's free. These are two big points in its favor. With all the typical paint tools (like Wand and Eyedropper) and the ability to pull icons from executable files, Greenfish Icon Editor Pro is a fast, easy way to edit or create custom icons.
Icon Editor Pro also supports animated icons, such as moving cursors. The way Icon Editor Pro goes about animation is a little non-intuitive. It's page-based, meaning you have to create a new page for each frame of the animation. A quick trip through the Help file and a few minutes of practice, and anyone can get the hang of this feature, though.
Icon Editor Pro also has several advanced image filters, a wonderful bonus for a free program. The ability to perform simple image tasks like blurring and sharpen means that your custom icons can look professional.
If you're unsatisfied with the stock icons in your favorite software, or want a custom overhaul of your Windows desktop, give this one a spin. It won't cost you anything to try it.
Note: This link takes you to the vendor's site, where you can download the latest version of the software.