Being inspired by a post over at snook.ca I added a favicon to my blog. The original image came from MouseRunner. Given the fact that I use FireFox since a long, long time I'm entitled to use this given image :). A word of advice: always check out the license for the image! There are many free (in both senses of the word) resources on the Web, but that doesn't mean that everything is. One nice list of free icons I came about is the one at maxpower. Iconarchive is also a very nice site with easy navigation, however each icon / set of icons is created by different contributors and contains different usage terms (but usually they are free for non-commercial use).
When creating favicons for blogger, make sure that you write the code in XHTML format (which means lower case and with a / at the end) like this:
<link rel="shortcut icon" href="http://example.com/favicon.ico" type="image/x-icon">, because blogger uses XHTML for its templates. Also, you can not use blogger to host ICO files (only GIF, PNG and JPEG), so you have to use something like Google Pages for this purpose.
As a side note I found a really nice color picker for the Gnome desktop: gcolor2.
This icon (shown below at its full 128 by 128 pixels beauty) got chosen because I try to provide useful and hype-free information on this blog.
Update: I've tried to make it work with IE, unfortunately the favicon.ico provided by Blogger seems to take precedence over the one provided in the header.
Update: I came up with a solution which seems to work on all the browsers I tested (minus IE6, but it does work with IE7).