Most people use Photoshop, Paintshop Pro or The Gimp. The Gimp is free, so it's a good choice if you're not into piracy, however, Photoshop, in my opinion is easily the most powerful. Having said that, for most users (me included), The Gimp is more than adequate. Paintshop Pro sucks. :p
For help on signatures, check out <a href="http://forums.eyesonff.com/showthread.php?t=71561">this thread</a>, where people can give you advice.
I also recommend checking out <a href="http://www.eyeball-design.com/fxzone/index.htm">Eyeball Design</a> and <a href="www.phong.com">Phong</a> for some totally kickin' rad graphics tutorials. I learnt most of my graphics skills from online tutorials.