Xara has several very impressives examples. But I don't think it is suitable for any kind of diagram. You can try Dia or Xfig (if you are in Windows look for winfig). But if you want a software for drawing Feynman diagrams see this thread, the last post indicate a platform independent software
How complicated do you need the drawings to be? If you just need to draw simple free-body diagrams and stuff like that, the drawing tools in Word are more than sufficient.
If you're depriving Bill of a few dollars by using OpenOffice instead of MS Office then you already have OpenOffice Draw that may be good enough for many uses. It has a number of shapes, connectors and symbols that are easy to use, more around, edit...
I've done more complicated drawings than those for journal publications, all using Powerpoint! I have also used Visio, which has many built-in 'stencils'.
You don't need anything more involved if most of your figures are blocks, lines, and simple curves.
For technical drawings, I usually prefer a vector-based (rather than raster-based) approach. They scale better and are often easier to modify and reuse. (I, too, have prepared some poster presentations using the drawing tools in Word and Excel.)
For me, some desirable features are:
- the grouping of primitives to, e.g., make a "schematic resistor", which can scaled and rotated as a single object.
- the ability to provide computed positions and orientations (so that a computer program can generate the figure).
- portability and nonreliance on a particular software package
- an accepted standard... like postscript or svg or LaTeX-picture
- human-readable format for manual editing
Interesting reading on SVG and other vector formats from a mathematician's viewpoint: http://www.maa.org/editorial/mathgames/mathgames_08_01_05.html [Broken]