As with any business (and yes your band is a business) you try and find out where you can save money. I am advising not to settle for a generic album identity and to budget for a custom cover. Your cover is really an album identity. To promote your album you should use that same design for a Facebook skin, t-shirt design, set design, possible new website design and more. Building a solid brand identity is crucial for success in this modern market, and your cover becomes the visual identity of your music.
A professional graphic artist should be hired, but doesn’t always mean you have to spend a ton. A design agency will have a team working for you but they will also likely be the most expensive choice. Freelance artists are usually less expensive and one with experience should be able to do just as good of job. There are many freelance sites where you can post your project so freelancers bid on it (elance.com, freelanceswitch.com, etc). I would advise against the crowd sourcing sites.
Even look to your own band members, is there someone that is creative? They can give you a head start and then just consult with a professional designer so they can get the files ready for print and advise you of any production issues you might run into. This is a small fee that can save you ALOT in the long run.
When you find an artist be sure to have a contract clearly detailing what you get for the settled price along with a timeline.
Feel free to post any of your tips in the comments below.