The first thing to do is create the background. So draw out a 144x120 px rectangle (but you can select another size) and fill with a light blue #C2CADA. You can fill it with a linear gradient as well.
Figure 1: Background
1st Circle and gradient
As a basic principle, for your circle to look like an inset button, your gradient should get a dark color at the top.
Draw out a 103x103 px circle and place it in the center of your rectangle. Fill with a linear gradient. See Figure 2. Use the Paint Bucket Tool to create a vertical gradient going from the top to the bottom.
Figure 2: Circle and gradient
2nd Circle and gradient
Draw out another 92x92 px circle to fit inside the circle you just drew in step 2. Make sure that you make this circle smaller than the first - to preserve the inset effect!
Fill it with a linear gradient. See Figure 3.
Figure 3: Circle and gradient
Inset buttons
And we are done! Here is a collection of inset buttons with icons.
Figure 4: Inset buttons
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