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Using: Adobe Illustrator CS and any subsequent version.
Here's a quick and dirty way of creating woodcut-style pictures in Illustrator.
Let's create a woodcut circle. First, draw a circle in Illustrator using the ellipse tool ('l' on your keyboard). Press 'shift' to constrain the ellipse.
Now, using your pen tool (type 'p' to select), draw a rough circle inside the one you have drawn by clicking the pen tool and creating straight lines. Do not bother fussing about with the bezier whatnot or trying to be too accurate. After all, you are replicating quite an unsophisticated artisan work.
Close the circle then draw another circle in exactly the same way on the outside of the ellipse.
Close this circle. Delete the ellipse. Your circles should look like the picture below.
Fill the outer circle with solid black, no line and fill the inner circle with solid red, no line.
There you have it! Easy peasy woodcut-style illustration. Obviously you can apply this technique to more complicated images.