I don't profess to be an expert in icon making, but I have noticed a few things that I think are worthy of being passed on. The things found here are not set-in-stone rules of iconage; merely the things I take in mind when I'm making my cions. Hope these tidbits benefit you in some way :D
L ' I m a g e
To me the ideal pic for an icon is one that:
a) is a good size, at least 300x300 pixels
b) is an attractive image in general
c) has no gigantic creases or shadows that come from scanning
Also, if the original image has bad aspect ratio (proportions), be sure to resize it. Just for reference, this is not the same "resizing" mentioned below.
C r o p p i n g
A single image can be cropped in different ways to make very different icons. Don't hesitate to explore the angles you can get by cropping different sections of the pic. Cropping is also useful in giving impressions. For example, if I wanted to emphasize an image of a guy looking down at the camera, I'd crop as far down as possible without losing the eyes at the top.
R e s i z i n g
This is resizing the image from say, 300x300, to the standard 100x100. Image quality often gets lost during resizing, the lines getting blurred. To avoid this, use the Sharpen option (under Filters) every 100 or 200 pixel changes. So for a 300x300 image I would sharpen before I change to 200 and before the final 100. This applies to photographs only. Drawings (cartoons, anime) are a different thing that I haven't yet figured out.
C o l o r
Color is as important as image choice and cropping. Usually scans and screencaps are too dark or muted. This can be remedied by (after cropping and resizing) copying the image on several layers and playing around with the layer filters. Ones I use the most are Overlay, Soft Light, Screen, and Color Dodge.
B r u s h e s
Thanks to the work of brushmakers there are some great icon border brushes around today. Don't feel pressured to use border brushes, though. Usually brushes should not be used with 100% opacity. Lowering opacity or using a border color close to the icon color makes a better overall effect. This also applies to non-border brushes. Don't be afraid to layer them, stack different colors, or flip the brushes around. The key is to make the brushes blend with the icon.
T e x t
Rule #1: Use anti-alias for all fonts except pixel fonts.
Rule #2: Use a color complementary to the icon.
Rule #3: Placement and size are very important. Experiment with this, and you'll most likely get a much more interesting icon.
S a v i n g
After you're all done and happy with your work, save the icon in a high enough resolution that won't destroy its quality. As for formats, most people use jpeg, gif, or png. I prefer gif because it gives a smaller file size.
Well, that's all, folks. Questions or suggestions? Feel free to comment :D