Two types of software, bitmap and vector.
Photoshop, Corel Photopaint, GIMP, etc. manipulate bitmap image, which are made of of lots of little dots.
Illustrator, CorelDraw, etc. are useful Vector programs as they allow one to create images made up of calculations of drawings, rather than dots. Therefore they can scale in size with no loss of sharpness (bitmaps get a jagged or blocky appearance when size is altered).
Some people use a combination of both to create labels. I personally have experience with Corel Photopaint, and not much else with anything else.
Also, some have been using Inkscape, which I think is vector-based and fairly simple.