I use Notepad++ (Windows) or VIM (linux) for code development. I use Photoshop CS3 for image development. Well, more accurately, my wife uses Photoshop. If I had to create images, they'd look terrible.
I also tend to use Photoshop CS5 for images.
However, for websites themselves, it's so much easier to use a CMS and build from there. Our guild site (http://www.innuendo-eu.co.uk) uses a CMS called Joomla!. It's fairly common and really popular, simply because it's very easy to work with, really customisable, quite fast and responsive, and secure.
The template i use there is pre-made, but the layout and a lot of the graphics, i've customised myself.
Thing is, i've been working with computers for 8+ years now, and website design for around 5 years. A lot of what i know is self-taught. As such, knowing about optimising a website and systems in general is a major plus. Knowing a web language such as PHP is a very good bonus too, and being able to work with SQL makes everything that much easier, but neither are essential.
You don't need to know about server architecture really.
You mainly only need PhotoShop and Dreamweaver. You can use notepad (or any varient or equivalent to)to do the background and use the </center> tags etc. You design the layout and slice it (Seperate) and export as .html
Well the thing you should ask yourself, "What am i gonna use it for?". Is it a gamesite for your guild in a game, well then you have wowsteed and guildlaunch which offer good portalsite for your Guild with both easy and advanced settings if you like to get your hands dirty.
If you are programming a portfolio for your CV or some kind of work you have done, or doing. Well then i would say a good WYSIWYG developer tool, there are some good free ones floating around and for image processing you can go with GIMP if you dont wanna buy Photoshop CS. GIMP work pretty much like Photoshop, but it's free so.
There are also portal templates for phpBB if you dont like the wowstead, guildlaunch service.
Adobe ( macromedia ) Fireworks can be very useful if you don't need the entire toolset of Photoshop. It is way simpler and intuitive, and lets you create and edit graphics nearly as good as photoshop does, aside from all those filters and special effects.