I make the images with Fraps and VirtualDub. Here are the steps I take:
* Record in Fraps, no surprises there.
* Open the .avi in VirtualDub and move the playhead to the location where you want to start the GIF sequence.
* Click the black left-facing arrow at the far right end of the play/pause/etc. buttons
* Move the playhead to where you want the sequence to end and click the right-facing arrow.
* Go to Video->Frame Rate, set it to skip every other frame (to cut down on size)
* Go to Video->Filters->Add.. and pick "null transform".
* Click "Cropping"
* Set the X1, X2, Y1, and Y2 parameters to your liking. Drag the playhead across the entire clip you selected to make sure everything gets in the shot.
* Make sure "Video" is set to "Direct stream copy" to ensure the GIF is a pixel-perfect copy of the clip.
* File->Export->Animated GIF