I use 3DSMax for STASIS, but apart from that most everything else is relatively cheap from a software point of view.
Paintshop Pro (which I think is actually abandon ware now?) for my 2D work.
After Effects for colour grading and effects.
Sony Vegas for sound design and editing.
FL Studio for sound design.
DAZ 3D for rapid character creation (things like dead bodies, skeletons...the nice gooey horror stuff!)
I would highly recomend DAZ Studio for beginners who just want to jump into doing their own graphics without spending years learning the tools. It can get a little pricey with the props and stuff that you buy, but its remarkably fun. Sometimes I just fire it up to play around.
DAZ, combined with a 2D photo editor can be EXTREMELY powerful, and you can get some fantastic results.
Alternatively, you can also use Sketchup and take props from the Sketchup Warehouse. Sketchup even has a few different rendering modes.
I think that the Daedelic games are all 2D hand drawn, and then coloured in Photoshop (or an equivalent program).
You can also look at Flash for animation. While I've never used it, I've seen some amazing stuff done with it.