Why do bloggers need a favicon? Having a favicon is yet another way to establish your identity and make it easier for people to remember your site among a pile of places. These icons are everywhere (bookmarks, tabs, URL) and are often used on other sites for blogrolls. The favicon is such a simple piece of promotion, you really should have no excuse for not implementing it straight away. Think about all the extra exposure you can get. Creating a favicon is quite easy if you are, well, creative.
How to create a favicon? Any appropriately sized image can be used (16×16 pixels). Personally, I find Microsoft Paint to be the best tool to play with pixels, given there is some image (like a logo) to play with in the first place. Then, use a generator to create the ICO file. Note that an ICO file is not just a renamed BMP (bitmap). It is a completely different format. Think of it as an archive of images (they can store other sizes at the same time). Although, browsers these days support other file formats as well, such as PNGs and GIFs. Finally, when you have created your favicon image, simply upload it to the root of your site and add the HTML code to the head of your page. Guidelines are in the Wikipedia link above.
Looking for some inspiration? I'm pretty sure you have seen some nifty icons while browsing the Web. Look at your bookmarks to see which ones stand out. Alternatively, check out the 50 remarkable icons organized into categories by Smashing Magazine. Then there are examples from my designs. Apart from my own blog, I have created a number of favicons for other sites. For example, when I designed the logo for GR8Egypt, I also used the associated brand image for the icon.
Here is a selection of my pixel art:
GR8Egypt - Collection of interesting stuff to keep you entertained.
Blogger Power - Safeguard the Web for children.
John Chow - The Miscellaneous Ramblings of a Dot Com Mogul.
MyBlogLog Blog - The official blog of your favorite social network.
Brohans - Hand picked videos for crazies.
Quickest way to get a favicon? For those of you who are not technically inclined, I can design a fabulous icon (compliant with multiple browsers) for just 20 bucks. I can work from the look and feel of your blog, or any images you provide. Let me know by email if you are interested.