One of the most important things your book has is its cover. The simple notion of "don’t judge a book by its cover" is simply preposterous, especially in an age where attention is fleeting and the most important thing you can do when marketing a product is to get someone to notice what you’re selling in the first place.
For this reason, when you create your book, you had better well give your cover as much attention and care as you gave the creation of your entire work in the first place. After all, if you can’t grab someone’s attention, they’re never going to get to read the brilliant words you put down on paper (well, paper in the olden days).
When deciding on cover art, one of the first things you need to ask yourself is "is this something I should be doing on my own?" If you don’t have any skills with Photoshop, Illustrator, Paint.net, Gimp, or any of the other professional image manipulation tools, then I recommend you stop now and consult a profssional graphic designer. It’s going to be money well-spent, and in many instance you can find someone to help with your artwork for "free" by giving them credit in your book (this can work especially well when working with a talented designer who really needs some legitimate projects to put into his or her portfolio).
If you do have some design skills, then now is the time to put them to work. One of the most important things to remember is that cover design is the first impression any potential reader is likely to have of your book. Even in instances where they are seeing a review, it is very likely that this review will be accompanied by a cover shot of your book – and if that cover shot doesn’t grab the reader’s attention it’s pretty unlikely they’re going to read the review (unless the review is written by someone the reader greatly admires, or you’re graced with the ultimate headline). That said, your cover needs to match the subject matter and potential audience of your book. 
For the cover of my debut novel, The Trouble With Being God, I took a look at what the essence of the story was, and what I considered to be one the key scene of the book. Since the story is an exploration of the devolution of mind, and the key scene (in this instance, the climax) involves the frantic writing of a message in the narrator’s own blood (it’s a thriller/horror book), it was pretty clear to me what I had to do: take on the essence of that character and scene and represent it as the essence of the book itself.
To do this, I kept things fairly simple. The writing was done with a bucket of red paint and a piece of posterboard – with a little added touch of a rosary I picked up from a local shop. My wife took a series of pictures as I continued to write the title of the book and add additional spatters of blood.
Once this was all done I took the photos to the computer, determined which one was the ideal for the cover, and imported it to Photoshop. Several iterations of changes to contrast and color levels later, I had the core of the cover. The rest of the artwork was done through flattery.
I’ve read thousands of books over the years, and have several dozens within easy reach, some of which I admire greatly. In my opinion, if something has been done right in the past, there’s no reason to reinvent it. So for the remainder of my cover art I looked at the books that I felt most closely matched the feeling I was attempting to construe, as well as those that I felt held the most artistic merit and used them as templates for my own. That said, there are a few key items I highly recommend including in your cover art:
- A synopsis with an attention-grabbing lead
- Quotes from readers or authors (I chose readers, because I wanted to connect at a personal level)
- An author photo and bio (again, to connect at a personal level)
- Suggested Retail Price
- A link to your website
- Space for your ISBN or other barcodes
For me, all of these items were included and created using Photoshop Elements. It’s available for a very reasonable price (I paid less than $150 USD for a package of it and Adobe Premiere Elements, which I used for my book trailer) and can do most of the bits you are going to require for a mid-level project such as this.
If you’re looking to do the project for even less money, however, I recommend you check out Paint.net. Be sure that you export at at least 300 DPI (Dots-Per-Inch), and that you save everything you can in layers. These are obviously simple things to remember if you’re familiar with art creation, but if you’re not you’re going to hate yourself later for not doing so. You’re also going to have to make sure you leave room for a bleed. (Basically extend your artwork farther than where you expect the artwork to end, but don’t include anything important there, as this is where the "cuts" will happen – and you don’t want to leave a potential for white edges).
Details aside, the most important thing to remember is that you’re cover is the first impression anyone is going to have of your work. It’s worth doing right, and it isn’t that difficult to do once you know what you’re doing. But if you’re not already familiar with the parts of the process, it is also something worth considering sending to a professional. Just because you can do it, doesn’t mean you should – and just because its something usually left to a "professional" doesn’t mean you can’t do it yourself. Give it a shot, see what you can come up with, and share it with others. You’ll know when you’ve come across the right one.
After all, it’s the visual representation of your baby. You wouldn’t want a less than flattering picture in your wallet for when you want to show her off.