The tool doesn't appear to be available yet, but Google posted about how you can upload and customize iGoogle with your own images now, without touching any XML:

http://googleblog.blogspot.com/2009/01/making-your-personalized-homepage-even.html

"We've just released our new tool for creating iGoogle themes."

...except, the link doesn't work.
Why post a link to a program..and it's not there?

Between this, the fact that I can't change themes, move modules, the page goes every which way, cant add modules..

I am almost ready to just chuck the whole thing.

I really would like to see some screenshots for this new iGoogle themes tool at

http://www.google.com/ig/tm

Not working here in Finland either (Internet Explorer 7, Windows XP SP3, ADSL).

Not Found
The requested URL /ig/tm was not found on this server.

"Update on 1/16 @ 10:30 AM: A number of people are having trouble accessing our theme-builder tool. We're currently working on the issue, and we'll post here as soon as it's up and running again. We're sorry for the delay, and we'd like to thank everyone who let us know they had trouble accessing this feature."

Still not available 4 days after their update that they were fixing it? Very strange for a new feature launch.

At this moment the tool is availible.

http://www.google.com/ig/tm

Philipp, regarding your note about limitations of the custom theme, the gadget I had made many months ago actually still works well at coloring the gadget box backgrounds and the overall background of the page...basically the 2 things that iGoogle themes (Google-provided or user-created) can't change. And it lets you use hex values so you can get exactly the colors you want:

http://www.google.com/ig/directory?type=gadgets&url=symbii.com/colormyig.xml

I use that in combination with Google's themes so I can get everything looking as I want. (The gadget is tiny and uses no images, so it doesn't introduce any delay in loading)

I get a blank page, with no code inside.

If you want to see it, click on this link : http://www.google.com/ig/tm?hl=en&gl=us

Anyway it still doesn't work because it use an iframe to render the preview, I get the content of the preview in French... without any change.
Another proof that Googlers never test their products in other languages.

How do you get the right picture size!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

I uploaded and then cropped two of my photos and was happy with the size results. I named the themes "Sparkling Aftermath" (the second one with a 2 and allowed access by other users but now I can't find them in the theme archive. I have allowed the recommended several days before looking for them but luckily I am still using the second one I created because I can't find either one to switch between if I wanted to. I am reluctant to upload anything else until I can find my original photos. I checked the "newest" listings and have gone through 300 pages of them just tonight. I tried "searching for my titles but they can't be found. "No matches" for my subjects or keywords. This is annoying.