you can make sprites like that using pretty much any tool, gimp and paint.net are both free and pretty solid. if you prefer working with vectors you could give inkscape a shot.

You'll have to learn how to do it, in some fashion. If you could deal with a 3d rendered look, depending on your skillset, it could be made easier, by using a 3d modelling package and rendering the animations from the different angles. But, at lower resolutions you lose detail. Also, if you can't learn the software, it won't help much.

^That is exactly what I do- it's pretty easy to generate my assets in Blender. You can see the dude I made for my latest project here:

http://flatank.blogspot.com/

The character looks cool. One of the issues I see with using our method is that it doesn't work when you need things smaller than 32x32 for the most part. Things get too fuzzy. Also, not everything can be done that way. Smaller sprites for iso-rpgs can't really be done right. The reason isn't only the size, rather the pixel faces(and expressions). You could model a big head small body in Blender, but it won't be very good when you render, unless you have something 64x64 and bigger.

But I for one love the technique. It is easier to get art to have the same style generally because you can use materials that are similar, and with the same lighting(if any). And it is so much easier to make changes. This applies to any animation you have, and multiplies more so when you have multiple angles like in isometric viewed games.

I'm rendering them to 128x128 and for now, I've been uploading nightly builds to:

www.egdahl.com/sm.apk

My latest additions include a particle system for sparks and smoke and randomizing the rock layout to break things up a bit. Be sure to tap the the upper left corner to get the character to change.