Notepad. That way, you're in complete control of your code.
I have used Dreamweaver, and although powerful, I can develop quicker in Notepad so I tend to keep with what works for me. DW is great to start off with and learn how each page is structured. Then you should be progressing onto hand code.
If I were hiring a designer I'd want the design hand coded and also the PHP hand coded.
As for Graphics, I'm with Adobe CS but I like to keep graphics to a minimal. Who is interested in graphics loading, when the content is what we're really after?