Check the pixel art resource thread:http://220.127.116.11/forums/index.php?topic=8246.0
For 2D games there are 2 other options more... vector art and pre rendered 3d models.
PNG with transparency can be saved with any better drawing programm (photoshop, paint shop pro, gimp... whatever).
In most cases bitmap transparency is enough (1/2/4/8bit indexed png/gif), which only allows two degrees of transparency - completly opaque and completly transparent. That kind of images can be drawn very fast with java2d without requiring any special runtime flags.