Make Human, and their opensource avatar-making tool, but I haven't had time to explore it for myself. It was mentioned on SL Universe (SLU) today, with a link to the site, and so I thought I would share it here in advance of pootling with it myself, in case it comes in handy. It reminds me that I have been meaning to do another round up of the free tools for all aspects of Second Life, as there are some more 3D modelling and animation tools available.
I expect there will be a lot of reviews over the next few weeks, and people will come back with the pros and cons for use specifically in Second Life. The thread on SLU is probably one to watch. I must admit that I am quite fond of my avatar in SL and would find it hard to trade her in for a new one, however good.