While a number of people here have given their favorite programs and methods, the main consideration is what your purposes are for making labels, and what the intended use for them will be.

Many of the suggestions can be applied quite satisfactorily if the intent is to produce a small number (small could be anything from a dozen to a thousand) disks), likely of your own performances, using as many of your own resources as possible, for distribution to friends and/or for sale at venues where you play.

If you intend to go "fully commercial" and want a truly professionalcommercial product, you almost certainly would want professional help. In this case (based on experience primarily with book publishing) you will want professionaly printing, and the printer will tell you precisely what formats, and most likely what programs you need to use.

Regardless of what programs and production methods you use, in the absence of specific instructions from the publisher/printer that will "dictate" what you do, it is far more important that you, or whoever does the artwork for you, must be throroughly proficient with the program(s) chosen than is the choice of which programs you use. Grabbing a new program that you know nothing about will almost never produce anything as good as you can do with any program you know how to drive. This proficiency is NOT ACQUIRED casually if you really want to do a good (commercial quality) job, and you likely would be better of finding someone who already knows how to do it for you if you're not confident with the program you pick.

If your requirement is a "personal issue" of a few disks that you just want to "look pretty good," you can probably get by with doing pretty much "whatever you know how to do," with trial and error until you get something you like.

Unless you have extensive experience (and we do have some here who do) my recommendation would be that you have the disks burned/produced by someone with the equipment and knowledge to do it right. CDs/DVDs burned on "home equipment" tend toward significant "customer complaints," although our more experienced people may be able to give better advice than I can on this. If you find a disk producer, they're probably the first ones to ask about the artwork since they'll probably know somebody who can do it right or who will be willing to advise you.

If you're going to have the labels commercially printed, the print shop that will do it is the one to ask about how the artwork should be done.

For personal use, make something pretty that doesn't fall out of the jewel box when you open it to get to the disk. If you can make the pretty pictures, using an appropriate paper and accurate cutting to the right size after the ink dries is the main requirement.

John