There are SO MANY ways that you can do it. I am a visual artist by trade by day and a "mad drummer" home-rec'er by night.
You can of course create an entire cd cover on one of the Adobe programs digitally. There are some wonderful type and text options on Photoshop. These programs are somewhat mindless but require a certain amount of training a a little bit of skill to work effectively.
If you have a bit of creativity and skill, you can create an actual painting, collage, photo montage, drawing, etc. to scale (I recccmmend 200%) then do a laser scan and reduce it to size.
It is always better for clarity and definition to work much larger and reduce when you're working by hand. You can also scan it into your computer and bring it up as a backgound and then arrange your titles and text from here. Or you can do it the old fashioned way of cut and paste (actually cutting and pasting with scizzors and rubber cement. That's where the current term comes from. That's how we used to do it over 25 years ago.) Or if you want hand lettering, you can do it directly on your original.
Depending on how many you want done, you can either run them yourself on a color copier (slow and expensive) you can run them on coated stock through your printer (slower and more expensive) you can have it done in bulk at a processing lab, or you can go to a large commercial print house and have a short run (500 copies) done in 4 color separation (about $200 if you negotiate) The commercial printing house will trim to correct size and fold for you for a small additional fee.
You can also buy a package at a dub house which will dub all of your cd's provide jewel boxes, print on the cd and produce the graphics and printing of the insert (cover). You pay for all of that, but when you buy the package it is more reasonable. You can cut costs a bit by providing repro ready graphics and text art.