A Freeware ASCII art conversion tool for win32, available at:
http://www.ykwong.com/asciipic.html
You can see an example of output from the program on my homenode.
In my experience, to get good results, you should start with a good contrast picture that does not contain a lot of detail. High contrast is necessary, because it seems that ASCII Pic doesn't represent a very wide range of shades well, so if all of the shades in your picture are close together, you will end up with an ASCII picture of a solid color. Low detail is necessary, because you are going from a high resolution from a low resolution, so the detail will be lost anyway, but if it is in the original picture, it might make the output text look a little strange in places.
The other quirky thing about the program is that it seems to operate under the assumption that the output characters are square. So, if yours aren't (and they probably aren't; most fixed-width fonts have roughly a 2:1 height:width aspect ratio), you will need to compensate by increasing the width of your input image, usually by a factor of two.
On the choice of fonts to display your pictures with: First, they must be fixed-width (monospace), like Courier or Lucida. In HTML, the tags <pre>, <tt>, and <code> should be displayed with a fixed-width font. If you try to use a variable-width font to display the pictures, you will see a funny-looking shape and despair.. In order to have the highest detail possible, you will want to want to make your font size as small as possible. Doing that is, of course, cheating, but it does make your pictures look neat.
Well, that's it - Happy ASCIIPic-ing!