I've seen lots of people blogging about printing out their own stencils straight from Word or Publisher. This is great and shows us how wonderful this technology can be.
My tip is not to use normal paper as some have suggested, although you can. I find that it is too flimsy. I use photo paper, it is more heavyweight and I find it leaves cleaner paint lines.
Just enlarge your font to the required size, print on photo paper and cut out the printed letters with a craft knife or small box cutter/stanley knife.
I used spray paint with this method the other day and the result was really good :)
With spray paint, the edges are a little fuzzier and in my opinion makes it a little more 'aged' looking, if that is the look you are going for. You can tidy it up with a paint pen after if you really want to. It's also really quick!
You'll see in the picture about, the cut line is a bit wobbly. That is just fine and dandy, as long as you do it within the letter and not in the white space. You'll be discarding the black bits, as the white piece is your stencil. You can tidy the edges whenever you need to, as long as the mistake is in the black bit/actual letter.