One way could be to convert the color space (poor performance):
ColorSpace cs = ColorSpace.getInstance(ColorSpace.CS_GRAY);
ColorConvertOp op = new ColorConvertOp(cs, null);
BufferedImage image = op.filter(bufferedImage, null);
Another would be to use a BufferedImage, as you do (better performance):
BufferedImage image = new BufferedImage(width, height,
BufferedImage.TYPE_BYTE_GRAY);
Graphics g = image.getGraphics();
g.drawImage(colorImage, 0, 0, null);
g.dispose();
Last but not least, the best performance is using a GrayFilter:
ImageFilter filter = new GrayFilter(true, 50);
ImageProducer producer = new FilteredImageSource(colorImage.getSource(), filter);
Image mage = Toolkit.getDefaultToolkit().createImage(producer);
source: http://www.codebeach.com/2008/03/convert-color-image-to-gray-scale-image.html
edit: per Mark's comment.