Developing audio for video games can be quite an intricate and complex task. Great audio can make a game with simple graphics seem quite sophisticated. Many of the early 8-bit video games had memorable musical scores. The task of creating custom audio can be greatly simplified by using the audio tools listed in this article. When you cannot bring in a professional audio engineer you will want to use these tools to produce the best sounds possible for your games.
The following audio tools I have personally used and can vouch for their quality.
Audacity (free for pc and mac) - A free audio tool that is great for post production of audio sounds. Audacity makes it easy to change the output format and the quality of the sound.
Garage Band (ios and mac) - Without any musical knowledge whatsoever you can compose interesting beats for you games. I find the iPad version extremely intuitive and fun to use.
as3sfxr Super Flash Brothers (free online) - An online flash app that is great at producing 8bit video game noises. Easily create jump, coin pickup, laser, power-up, blips, and hit sound effects.
Bfxr (free online) - Bfxr is the next gen version of Sfxr. This free online Flash app works similarly to Sfxr while adding additional bells and whistles to help with making video game sounds.
Unity Asset Store (free or paid) - The Unity Asset store has many audio assets covering sound fx, ambient, and music. You can find retro 8bit sounds up to professional music scores. I definitely recommend checking out the Unity Asset Store.
More Recommended Tools
Here is a list of tools that are recommended by the audio pros. I haven't personally used any of these tools.
Figure ($0.99 for ios) - An intuitive and easy to use app for making music. Figure was a best of 2012 app recipient.
Animoog($24.99 for ios) - Here is Animoog's description from the app store.
Animoog, powered by the new Anisotropic Synth Engine (ASE), is Moog Music's first professional polyphonic synthesizer designed exclusively for the iPad. ASE allows you to move dynamically through an X/Y space of unique timbres to create a constantly evolving and expressive soundscape.
Pulse Boy - Online retro sound effect maker. You create a song almost like you are creating sheet music. Generates authentic sounding 8bit songs.
Beards, Cats, and Indie Game Audio An entertaining podcast about audio in video games.