DMG Tool was created to simplify the process of creating compressed disk images in Mac OS X. It's specifically designed for speed. The minimum you need to do is enter text into one field and click two buttons.
DMG Tool is an AppleScript Studio GUI front end for the command line tool hdiutil. The commands used are hdiutil create, hdiutil convert, hdid, mv and rm. Since it makes use of the command line tools exclusively there are a few gotchas as noted below.