A variety of software options are available for creating physics diagrams, catering to different needs and complexities. Xara Xtreme is recommended for general graphics and drawing, although it may not be ideal for all types of diagrams. Dia and Xfig are suggested for more technical drawings, with OpenOffice Draw also being a viable option for simple diagrams. Asymptote is highlighted for its capabilities in creating complex diagrams, while Microsoft Paint and PowerPoint are mentioned for simpler needs. Vector-based tools like Visio and Inkscape are preferred for their scalability and ease of modification. Desired features for diagram software include the ability to group elements, computed positions, portability, and compatibility with standards like SVG or LaTeX. Additional resources and links to various software and graphics manuals are provided for further exploration.