A list of 15 popular and tested websites that you can use to create a Favicon for your website.
Web Script Lab Favicon Generator - You can upload a JPG, GIF, PNG or BMP and convert it to a 16 X 16 favicon.
Favicon Upload Gallery - Upload file and make it a favicon (four different sizes). Add it their online favicon gallery.
Favicon.cc - Create your own icon by importing a picture or using their online designer.
ConvertIcon - Allows you to convert PNGs to ICOs and vice-versa.
Dynamic Drive Favicon - Upload GIF, JPG, PNG or BMP and create favicons or icons.
Favicon from Pics - Create a favicon or animated favicon from your uploaded photos.
256 Pixels - Has a daily favicon contest. Create a new favicon with their built in palette and they now allow uploaded pics.
HTML Kit - Buddy Icons from Pics - Creates messenger/buddy icons from uploaded pics.
Design Palette Only
Anitfavicon - Create simple colored icons with up too 2 lines of text.
My Cool Button - Create high quality "web 2.0" style icons.
Somacon Icon Drawer - Draw your own icon.
Ajaxload - Free animated icon generator for use during ajax loading time.
Paid Icon Services
Iconize Me - Artists turn your pictures into icons.
Icon Buffet - Large selection of sharp icons for websites.
StockIcons - Large selection of icons for your site.