Set post titles as images?

I’ve seen this used on a fair number of sites, and just curious how it’s done? Is this a specific plugin or a hack that’s implemented?

It basically turns the text of the post title into an image, using a font of choice (I think) though I’m not quite sure how they add all those effects such as color and drop shadow. Unless of course they actually sit down and make a new image for each and every post they make.

My friend showed me somethign like this he was doing in php. Any ideas on this?

Thanks in advance