I love Illustrator personally. For some reason I've always gotten along better with it than Photoshop. Although sometimes it can be frustrating... I think you probably need both to do EVERYTHING though.
I have always used Illustrator because I am HUGE vector fan! But since I do not have it on my personal computer, I have found myself editing previous banners created in Illustrator on Gimp or Picnik.
GIMP all the way. You can use GIMP for graphic design and photo editing so it's like a complete package. The biggest advantage is, it's free! I've just made two tutorials on making an Etsy banner using GIMP in fact, the second one even has videos! Maybe they'll be helpful...