Lots of options have been described here - search the forums. In terms of free options, GIMP and inkscape are great for the computer-art inclined. There are a number of label-generating webpages that allow for rapid generation of some really nice labels (sorry, I cannot think of any links at the moment - I think 'labelizer' is one such page). Some even draw them out old-school (pencil & paper and all that), then scan and print copies for their bottles.
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