Create Buttons
Make your buttons in Photoshop, including second state layers (which you leave turned off). Notice how closely cropped the image is. This avoids any empty space around the button images, which costs in download time.

Import into Image Ready
Bring the file into Image Ready then use the guides to indicate where you want to the image. Slice the button images so that the changing area is its own slice, allowing the unchanging area of the buttons to stay constant. Create guides from the slices (Under 'Slices' menu).

Create Rollovers
Open the Rollover palette. Select the slices where the changes will take place, create a new layer in the Rollover palette and turn "on" the second state layers (make the hidden layers visible).

Build the Page
Under 'File' choose 'Save Optimized As' and select 'HTML and Images.' Image Ready will slice your image along the guides, put these slices in a folder called 'images' and create an html page with a table that contains all the slices. You may either build your page around the Image Ready-generated table or copy and paste this table code to another page. If you have "empty space"- between buttons, for example- you will want to delete these slices from the html table after it is created by Image Ready.* Make sure to remove the corresponding images from your web folder.
*Unfortunately, if you try to save only selected images the Image Ready program will put a transparent image in the place of deselected images.

Review
Image Ready will

• Slice an image
• Create an HTML document with table to hold the slices together
• Create rollover buttons (if second states are on own layers)
• Optimize all images

Working example of above.
With this method you can have large buttons or tabs that still swap quickly on rollover. An example.