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Texture Packer is hands down the best sprite sheet generation tool on the market.
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Free Texture Packer is an open source tool that allows you to pack multiple images into one atlas for you games or sites.
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Have a sprite that you want to show off?
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Atlased is a sprite sheet and atlas editor for 2D games development, asset preparation pipeline, game jam sessions and etc. It is capable of creating sprite atlases (both images and markup) and performing various editing and export operations.
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rucksack - texture packer and resource bundler.
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An open source sprite sheet packer. More tools coming soon.
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Cyotek Spriter is a popular tool that creates sprite sheets and dynamic text effects for games, HTML, tool strips, HTML, and many more.