Gorillaz Icon Tutorial
This is my first tutorial, so go easy with the flames. It should be relatively easy. Although this is made with Photoshop, I assume it's transferable to other programs.
Go from
to 
1. Crop the base image (I'm using this image, ganked from schneeflocke) however you like it and make it no larger than 98px in height.

2. Create a new 100x100 image with a texture (courtesy of
dearest) as my first layer.

3. I cropped a part of this image to be 100x100 and paste it as a new layer. I set it at Color Burn, Opacity 50%.

4. Go back to the first image you cropped and use the Polygonal Lasso (or Magnetic, whichever you prefer) to select the area around your image. I always magnify to 350% to make this process easier.

5. Copy and paste him onto your image in a new layer.

6. I added a 3px white stroke, drop shadow, black->white gradient overlay and yellowish overlay. This particular step is all about your tastes. I just like the way my experimenting came out.

7. My final step was to add text. I used the font 4990810 and messed around with the leading, kerning and scaling until it was to my liking.

8. Since I thought it looked a little unfinished, I added a 1px black border around the whole thing.

Other icons made with this process:

I know the skipping between two images wasn't really necessary, but I do a lot of frivolous things so I don't confuse myself in the process. I'm pretty new to this, so I imagine old hands know a lot of shortcuts I don't.
Go from
to 
1. Crop the base image (I'm using this image, ganked from schneeflocke) however you like it and make it no larger than 98px in height.

2. Create a new 100x100 image with a texture (courtesy of
dearest) as my first layer.
3. I cropped a part of this image to be 100x100 and paste it as a new layer. I set it at Color Burn, Opacity 50%.

4. Go back to the first image you cropped and use the Polygonal Lasso (or Magnetic, whichever you prefer) to select the area around your image. I always magnify to 350% to make this process easier.

5. Copy and paste him onto your image in a new layer.

6. I added a 3px white stroke, drop shadow, black->white gradient overlay and yellowish overlay. This particular step is all about your tastes. I just like the way my experimenting came out.

7. My final step was to add text. I used the font 4990810 and messed around with the leading, kerning and scaling until it was to my liking.

8. Since I thought it looked a little unfinished, I added a 1px black border around the whole thing.

Other icons made with this process:

I know the skipping between two images wasn't really necessary, but I do a lot of frivolous things so I don't confuse myself in the process. I'm pretty new to this, so I imagine old hands know a lot of shortcuts I don't.