Which graphics package is the best

The best would be one of the top end progs, like Corel or Photoshop.
But if you're new to skinning and haven't had much graphics experience, you can either get hold of The Gimp, which is a free graphics program availbal for both Windows and Linux.

There's also Paint Shop Pro. It's one of the overall best progs out of the affordable ones, and is pretty well repected, and used by a large majority of skinners. This would probably be the best one to go for.

Listen to Hippy. You can also practice with MS Paint as you already have that one.

I don't need anything more than The GIMP(I do use it, I do better things than my Winamp icons). Version 1.3(beta) is really good, but unfortunatly it doesn't work well if you get the prebuilt binaries installer for Windows.
If you do get The GIMP, please use indexed images in a compressed format when you put things onto the web. It will save dial-up users alot of time.