Graph paper and various pens, pencils, markers etc. for me! I'm not going to get excited about cost, though. I know I've spent over $50.00 on graph paper and colored pencils. It's the fact that I can sit down and just do it without having to learn anything that appeals to me.
In order to have the land masses look realistic on my world I drew a Pangea (sp?) like super continent and then used scissors to cut it into five sections, plus a few islands. I positioned the land masses as if they were moving on four separate tectonic plates. Then I redrew the entire thing on a larger scale and not taped together, divided the land masses into countries, added a few chains of volcanic islands along the plate dividing lines, and I was ready to go.
It only took me about eight hours to do the entire map, and that included mountains, hills, lakes, rivers, and different shadings for different climates. I have it stuck on the wall next to my computer so I can refer to it while I'm writing.
IMO, draw the map. I'm not an artist by any means and I did it. Luckily, land doesn't usually end in straight lines. If my hand slips, I add a peninsula.