How to create a website Favicon using Photoshop
The favicon.ico file is your website icon. It shows up next to the URL in your browser, and next to the website in your favorites/bookmarks. It increases your visibility, and not using it will, in my opinion, make your site look a bit amateuristic. Creating one is quite easy, as long as you have Photoshop. I’m using CS5, but older versions work as well.