Software used to create Icons, Buttons for Mobile Application

The best way? Use Photoshop (preferred) or Fireworks.

• Draw everything using vector shapes.
• Use Layer Styles for additional effects.
• Lay all the elements you need out flat, and use Slices to save the PNGs required.

There's quite a few questions on graphicdesign.stackexchange.com on the topic. A search might help you out.