I'll map out encounters in advance sometimes, so that I have a go-by for sketching it out on the wet-erase battle mat. Or, if I really like a design, I'll use gaming paper instead of the battle mat.
I usually draw them by hand, I'm better at drafting than I am at using map making software.
I also try to have a map of the city / area where the game is set. In this case, I bought a copy of the Rand McNally Hampton Roads Street Guide. For an electrical engineer, I sure seem to prefer doing things by hand. Mostly it's because I haven't taken the time to learn how to do the cool things with google maps I've seen others pull off.
For my last DnD game, I drew out several levels of map. Several town/city level that included major streets and landmarks, while leaving side streets and alleyways to the imagination. A map of the region wherein they're adventuring, and a map of the larger world. These then get scanned into the computer, and put into Pixelmator (or Photoshop, if that's your preference). From there, I edit them as I see fit, save as *.jpg and load them onto the campaign's wiki so the players have access to the non-confidential versions.
The purpose of all these larger maps is mostly consistency (so Bob's BBQ Shack doesn't move from session to session), calculating distance/travel time, and as a player aid to help them keep a perspective on where they are in the world (country, region, town).
