I use Paint Shop Pro X3 mostly. I do not like the latest version, X4. I also have Photoshop Elements, very similar to PSP. I have also used Autosketch, a CAD program.
A CAD program is useful if dimensions are very critical. You can individually size every element in the drawing, as opposed to only controlling the size of the whole drawing. While most CAD programs are quite expensive, there are a few cheap ones, like versions of TurboCAD. You only need a 2-D CAD program, not 3-D, and almost any CAD program will do for decals. Downside of CAD programs is that they generally (at least the lower priced ones) do not have as many fonts, and work with as many colors.
A photo editor like PSP, PS Elements, and such, is nice because you can import a picture of the prototype, make perspective corrections, and use that as the basis of a decal without creating the design from scratch.