The best one that I found is http://www.favicomatic.com/ I say best because it gave me the crispest favicon, and required no editing after their transformation. It will generate favicons at 16x16 and 32x32 and to quote them "Every damn size, sir!" Also, their site looks cool and is easy to use.
They also generate the html that you need to use for the files they generate.
I've successfully done this for my website.
Only exception is, the SeaMonkey browser requires HTML code inserted in your
; whereas, the other browsers will still display the favicon.ico without any HTML insertion. Also, any browser other than IE may use other types of images, not just the .ico format. I hope this helps.