I have thought about doing a label for my brew to give some bottles away as Christmas presents.
Being a graphic designer, I have all the pro software, but I think CorelDraw is one of the best value-for-money packages out there.
If you only want to use the software for a short amount of time, Adobe has full-featured demos available for 30 days trial. Illustrator and/or Photoshop should do the trick for you. Download from
http://www.adobe.com.au (but make sure you have broadband - otherwise you'll be sitting around for a week while it downloads over dial-up).
One thing to consider though: don't print using an inkjet printer. The ink will run as soon as the label gets wet through condensation. Colour laser printing is the way to go, although I think you can get inkjet printers that have waterproof inks now.
Another thing I was thinking of was to print the majority of my label through a black & white laser printer onto coloured paper and then screen print or potato stamp a coloured element to it for visual impact. A lot cheaper than forking out for colour laser prints (unless your workplace has a CLC printer).
Lastly - adhesive. I think I might just use spray adhesive, as normal labels come in boring white. I'm not sure how waterproof this might be though. You can get these cool clear labels from Avery though, but they're bloody expensive!