MannyP: yeah, the consensus seems to be cursive is not so easy but non cursive isn't much of a problem.
I spent most of yesterday checking out some options. Like you, I'm considering making my own. The very best custom-created cursive fonts cost in the order of $US 150, while a non-cursive font vaires; I found prices as low as $9 for a fully automated font (no hand tweaking).
There are apparently at least three versions of proprietary applications that create fonts, and people do make them by hand.
I did find some apparent bargains, especially if you're willing to hand tweak it yourself with a font tool, it might be fairly quick and painless.
So far, these seem to be the best choices:
Roger's link to Fontifier above; they are automated (no hand tweaking at all) and use software developed when researching Artificial Intelligence at MIT. For $9 it's almost too easy.
of England, who offer Standard (144 user defined characters, £9), Signature (214 user defined characters, including signature, £15) and premium (£60) versions.
The Premium is recommended by them for cursive writing, they claim to extensively hand-tweak the premium font, and a few of the cursive examples work quite well. You can check their work out; they have free downloads of fonts they've created; depending on whether the user gave permission or not.
Finally, there's the guys I remember
from more than a decade ago. At $US 150 they're the most expensive but apparently the method they use (automated, protected by patent) is quite realistic, if a bit of a pain. If you've ever used Grammatica and the like, you'll know what I mean. With OSX it seems they use the Services Menu, which is easier than cut & paste, at least.
Anyway, it's the one used by movie stars, George W Bush (yeah, that GWB) and the like, because it uses variations of the same letter based on context, and thus doesn't give away it's a font so easily (it's a little too neat, like all handwriting fonts, but it doesn't have the "dead giveaway" whereby you see the same "a" character everywhere). I think it's a Postscript font, though.
After that, there's a handful of font designers who offer a font creation service done mostly by hand. The price varies but it's surprisingly affordable; few are more than $US 99 and some are half that.
I was able to discover the tools they use though: TypeTool
(FontLab or Fontgrapher isn't really needed, but of course it would work) along with ScanFont
. About $US 200 if you want to go into business for yourself making custom handwriting fonts.