Yeah I agree, GIMP is a good freeware photo editing program. I use it for everything war 3 related. Google search it for a download link.
To make icons you will need a couple of other programs to make it easy. First off I recommend you download an .mpq browser from the tools section on this site so you can extract an existing war 3 icon to work with. Another good program that can do this and convert files from .tga to .blp (and reverse) is the Warcraft III viewer which im pretty sure can be found in the tool sections aswell.
Just extract and icon (anythingBTN.tga) and open it in gimp. You can just drop your image in the centre and use the existing border. Once you have completed the icon and saved it then you can create the DISBTN (disabled version) just by using a filter to darken the image and then airbrush black around the edges.
As far as importing and exporting custom icons goes just google a tutorial, it should link you to either one here or on the helper website.
oh and im not sure if you can rep anyone when you are below 10 rep yourself lol, so it's probably not good for your karma to advertise that until you can. peace yo