I do like a nice label, and they are usually well received as more 'professional' when you hand some bottles out to friends.
I started out in good ol MS paint, then finally learned how to use photoshop a bit, which makes changing things very easy (different labels for different sized bottles - # of standard drinks etc).
I print out and use wife's scrapbook sliding cutter to cut them. Then brush on milk to attach, and they just slide off in hot water afterwards. I'll attach some examples when I've compiled them...