To create a favicon, for wordpress, take the image shrink to 16x16px using ifranview or gimp then upload as favicon.ico in your themes folder. If the file already exists then overwrite it.

You will need to open header.php and add this line inside the head tags of the html to add your favorite icon.

<link rel="shortcut icon" href="<?php bloginfo('template_directory'); ?>
/favicon.ico" />

Adding a favicon is amazingly simple and can be accomplished within minutes.