Using a favicon gives your site a more professional look and feel.
The required dimensions of a favicon are 16×16.
You can easily create a favicon in Photoshop using the following procedure:
1. Download the Windows Icon (.ico) format plugin for Photoshop from here and install. Restart Photoshop afterward, if open.
2. Create a 16×16 image that you want to use as your favicon.
3. Select File > Save As and save to .ICO format, not .PSD format.
4. Insert the following code into the <HEAD> portion of your page(s):
<link type="image/x-icon" href="http://path/to/favicon.ico" rel="shortcut icon">
If the icon does not show as expected you may have to restart your browser. I’ve also experienced issues where favicons do not display when served from services such as Amazon S3. This is usually a permissions issue.
Great books on Photoshop are available here.