Why use a nicely typed up diploma? Well, it looks professional, nicer, and generally speaking, is questioned less than one written in crayon. The one written in crayon would most likely be dismissed as a joke. You don't want your child's education to be seen as a joke.
If you are homeschooling during the high school years, you will want to keep records, detail records, even if your state doesn't require records. This makes transcripts easier to do at the end of your child's high school career. Armed with good transcripts, records, and other things like tests scores your child should have no issues with their post-high school choices.
NOTE: Any and all records you keep, unless your state laws states otherwise, will be for your eyes only. A tool for you to make those transcripts (for post high school plans) and diploma.
Colleges, often, seek out homeschoolers and many even list what they require from homeschoolers on their websites. Or you can talk to the admission department of the college you're thinking of and ask them what they would want from you.
If you go the make your own diploma route, besides avoiding crayons, you will want to include certain information: It's a high school diploma, your child's name, and wording that indicates your child completed the requirements needed for graduation, date, and signatures. HSLDA site has more details.
Follow Up: What You Need to Know About Homeschool Graduation Requirments?
photo credit: gadgetdude