You should create it in a vector graphics program like InkScape, that way you have a clean, scalable to any size graphic, for every purpose, forever and always.
This.
Photoshop has some vector graphic functions, so a vector watermark/logo can be made -
http://tv.adobe.com/watch/adobe-eva...gos-for-watermarks-and-overlays-in-photoshop/
If your doing a more complex, or sophisticated logo/watermark, its better to use a vector dedicated program like Adobe Illustrator.
Yes photoshop has vector functions but, the extent in which they have them is pretty weak, and the ammount of control you have over your vector is weak as well (for really sophisticated things)
Additionally photoshop handles text
really poorley. Its designed to work with gradients primarily, and when you try to render text out of photoshop it often looks fuzzy or has halo'd edges. Again, adobe illustrator, or indesign, don't have these issues.
If your making something simple photoshop will work just fine and, your logo may turn out wonderfully, I just prefer to work in a vector based program :thumbup:
Rasterize it and it's resizable to any size. Don't worry I use PS for watermarks. Sometimes I use Illustrator but I mean PS Does well and it works.... so No need to switch
The opposite. Rasterizing a vector is converting it from a vector mask, to pixels and dots. You can resize those pixels and dots within reason, but even if you designed your logo at 2000x2000 pixels, you could never get something you could use for say a billboard. Make something at 500x500 pixels, then rasterize it, and try to resize it to your screen. Unless your working on a little netbook youll have quiet the pixelated image.