There are many tools available in the market which are used for the banner designing. Generally people use the Adobe dream wear and flash maker if the banner is a flash. dream wear is available on the adobe website and you can download the trial version.
Photo shop is the best software for making banner as well as to design web page and website too. Photo shop latest version cs5 is the excellent software to do design very easily because it has very nice advanced features.
I have used Photoshop since last two years. I think it is the best software for making banners. You should use Photoshop to make your banners easily. It is user friendly. Also it has some good features and functionality which makes your banner good.
The winner is Photoshop. Still King. Ok I really think if some one is going to usurp the Photoshop reign they better do it fast. Really fast, because PS has been the King for years, you have so much flexibility and you can get very inventive. If you don't know how to use it then start now. Banners are nothing more than setting the size and getting creative. Photoshop, check!
As most have already said, Photoshop is extremely good
However, if you have no experience with graphic design, and would just like to create something on the fly for your website, then go for any of the free online services, just Google "create free banner", and you'll find tons of free sites
Yeah, Photoshop Image ready is the best and widely used application.
Ulead GIF Animator 5.0 is also an option for you to create compact animation for the Web in AVI, QuickTime , or animated GIF.
If you are looking for online editor you can try gifworks.com