DropDMG is the easiest way to create .dmg and .img disk images on Mac OS X. It can encrypt images and post-process them with GZip, BZip2, or MacBinary. It can create images with rich-text license agreements. It also supports segmented images and images that auto-open when you mount them. All the options are available from AppleScript. More info and download link here.
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The “Disk Copy” program in your Utilities folder does the samething. Just go to the menu item File -> New -> Blank Image. Very easy to use and very secure (128-bit encryption)… for all of those webcam pics of yourself.