What you really need for your task is not a raster (pixel based) application (such as Photoshop, GIMP, or Paintshop Pro). You need a vector application, the best being Adobe Illustrator. What this allows you to do is work much more accurately with lines and type (crucially using bezier curves) and allows images to be scaled infinitely without loss of quality. The final result can also be exported/converted to a raster image (.psd, jpeg, png, gif, bmp, tiff, etc) if need be. Photoshop does have some handy text tools (text on a path, etc) but they pale in comparison with Illustrator. Furthermore, raster images will tend to be less sharp and cannot be resized without loss of quality. Professionals use vector for this type of work.
I would advise you to convert type to outlines within the workflow.
Having had a quick look for freeware vector software I have come up with these, though don't know which is best or even good: