People want to design custom and unique theme for their WordPress blog. So, do we need to know complete php before starting to design a WordPress theme?? I will say NO, but basic knowledge of php is must. You should also have good knowledge of HTML/XHTML, CSS.

You should also be good in graphics design to give attractive look to your theme. The best place to start learning is WordPress Blog Design and layout.

I have also made few WordPress theme, if you wish you can use any of the theme.
Free WordPress Themes from WPYag

I will soon post beginner guide to design a WordPress theme.