I'd say that you should probably look to your local art school. I'm a graphic designer, and I charge much more than $150 for a logo...and I can beat just about any design firm in the area. I use Macromedia Freehand and Adobe Illustrator for my design work. If you go with something like Photoshop or Paintshop Pro, make sure you use a high resolution (like 300 dpi at least) for your original and scale down from there.
The advantages of having a designer create your logo is the simple fact that they "know" how to design (color theory, contrast, space, etc...).
Or, use the help of the people who have already offered it here in this thread. Nothin' like Autopians helping Autopians.
Good luck with whatever way you go.