this could be a lipoma, ganglion, fibroma, or other cyst.
i would have this aspirated and sent to pathology to make sure it is benign.
sometimes, an MRI can also help evaluate the contents of the cyst and evaluate for invasion into the surrounding tissue.
then, go from there as to wether or not it needs to be removed.
This question should be asked on a foot care/podiatry forum.
Try this one:
http://www.medhelp.org/forums/Foot-Care-Podiatry/show/314