What software is used for creating logos?

Photoshop

There are plenty.

Many people use Photoshop, or hire a professional graphic designer to make one in Photoshop.

Many people prefer logos designed by Photoshop, because of it's professionalism.

However there are other services available (depending on your country). Some are free, some will charge:

• LogoSmartz
• LogoMaker
• GIMP
• SoThink
• LoGaster
• LogoCreator
• LogoEyes