I use Adobe Photoshop CS and Animation Shop 3.
First, you need to have a base (texture, whatever), an already made icon, or something. This is what I will be using, if you'd like to do the same thing:
Once you have that, you need to add the text, do what you'd like to it, merge your layers, and add a border (if you want). Once you've got that, copy and paste the image into Animation Shop.
Then, go back to PS and undo all the way to where you have your layers again. Click on the text option, and then in the top navigation you should see a "T" with an arched arrow line. Click on that, and go to bulge. Set the bend to 10%, leave everything else alone. Merge your layers, add a border, copy and paste this image into animation shop (CTRL+SHIFT+L). It must be in a frame AFTER your main image (THIS is what it should look like).
Go back to PS, undo until you see your layer. Make the bulge's bend 30% now. Continue the last step. If you don't know that, merge your layers, add a border, copy as a new frame into animation shop. Go back to PS, undo until you see your layer. Make the bulge's bend 50% now. Continue the last step. Now, you should have 4 frames. Copy the SECOND TO LAST frame and paste it AFTER the last frame. Then, copy the THIRD TO LAST (it is not the FOURTH to last, since you copied the other one) frame and paste that after the last one. Do that until it looks like you go from frame one, to the last, to the first again. Like this.
Select the LAST frame, hit CTRL+Enter and change the number to 1. Save your image, and it SHOULD be small enough for livejournal. This is my end result:
Questions? I rushed this a bit, so it MAY be confusing, but I WILL answer your questions. :)