The programs that Mark listed are the 'big boy' programs for game developers. There are free programs that do the job decently as well. GIMP is a good replacement for the costly Photoshop, and XSI Mod tool is a free program that XSI released specifically to work with Valve's Source Engine.
Of course if you have the money to dish out for those other programs, I would urge you to do so because they will get the job done a lot easier, and also because they are the programs that game developers use and it would be best to get familar with them if you plan to study game development.