This is the simplest way I have came across making a favicon and I have being using this site for every website I make when I go to make a favicon. You just upload the image and it creates the favicon and provides you with a download link. What’s also cool is you can select the option to have your favicon animated or make it scrolling text. All of this is completely free thanks to http://www.html-kit.com/favicon/
Check them out, it’s incredible how fast and easy it is.