Oh, oh, i know this one. Use whatever program you feel the most comfortable with. If you have yet to really play around with anything, there's GIMP, paint.net and paint tool SAI when it comes down to free alternatives.

Also, your finished art would go here http://forum.toribash.com/forumdisplay.php?f=152

Now, i'm just a newbie, and i likely missed a buncha things, so if you have more questions, try using the forum's search feature to get started. Good luck out there!