FontForge (formerly called PfaEdit) is a PostScript font editor which can 
create and modify outline fonts in Type 1, CID-Keyed, TrueType, OpenType 
format. It can generate bitmaps and save in BDF format or embedded bitmaps
in TrueType/OpenType fonts. 

It can generate Type3 and SVG fonts if built with multilayer feature.
If you feel the shortage of memory, rebuilding multilayer-disabled
FontForge with FONTFORGE_NO_MULTILAYER defined will save some memory.

If you have installed AutoTrace or Potrace, you can generate outlines
from imported bitmap images. 

For more information, see 

WWW: http://fontforge.sourceforge.net/