A Favicon is that little icon that shows up in the address bar of your Web browser. Most good Web sites have them. While they’re fairly easy to create (all you need is a 16x16 graphic) they’ve just got a bit easier.
Favicon from Pics is a Web site where you can upload your own image and it’ll turn it into a favicon for you. You’re best starting with an image that is close to to 16x16 as you can get, but it does a pretty good job on things are aren’t huge.
Simply select a picture, logo or other graphic (of any size/resolution) for the "Source Image" and click "Generate FavIcon.ico"
On a related note -- you can add custom favicons to your FireFox toolbar to spiff up your 'Favorites' links using this FireFox plugin. (Note: Use the 0.2.5 for FireFox 1.0.x browsers, and the 0.3 beta for FireFox 1.5 beta or above).