I've been painting with Photoshop for several years now. Here's an overview of my process:
Equipment: pencil, bristol board, scanner, Wacom tablet (though other brands seem to have improved a great deal over the past few years), Photoshop 6 (an oldie but a goodie).
I still start my digital paintings with a scanned pencil drawing. The drawing is mainly lines -- I don't render too much, since I'll just have to do it over later, but sometimes I will try to establish my lighting if I think I'll forget later on. With the drawing open in Photoshop I make a new layer, set it to multiply, and fill it with a medium gray or burnt sienna sort of color.
On that layer I build up my darks with a burnt umber kind of color, or dark gray. I don't jump to black, but use a 93-96% dark. Here I'm establishing my lighting and defining forms. It's almost all about drawing at this point. Ideally I have colors in mind and am planning ahead for them, but I try to get the lights and darks mostly working first.
After the darks are set I'll go back in with a lighter gray (like a yellow ochre to naples yellow color) and establish my lights. Again, this is for lighting and forms, and is a lot like how genuine painters do/used to do their underpaintings. There's some difficulty getting the lights to work over the pencils below, so after I've got most things blocked in I'll flatten the image so I can paint over the pencils where I want to.
I'll frequently use a new layer set to color mode for the next step, to block in my coors without needing to worry about messing up my lights and darks. (I think setting the paintbrush's mode to color would give the same effect while needing less RAM, but I'm not certain. If your system has trouble with layered documents give it a try.) It's important to give the colors variety -- so a red thing isn't a flat red, and the green thing isn't a flat green, and a white thing has all the colors around it reflecting off it -- and it's easiest at this stage.
After a while working with the color layer I flatten the image and go at it with my paintbrush. From here on out I rarely work with any layers at all. I think people tend to use layers in case they want to go back, but I use snapshots and the history eraser for that. Not using layers makes files much smaller, so saving is much easier, and I think it tends to need a less powerful computer. I think it's really quite handy.
Here's the progression of a recent/current piece:
Drawing -
http://www.drewbaker.com/en-1.jpg
Darks on multiply layer -
http://www.drewbaker.com/en-2.jpg
Lights on multiply layer -
http://www.drewbaker.com/en-3.jpg
Lights on flattened image -
http://www.drewbaker.com/en-4.jpg
Basic colors on color layer -
http://www.drewbaker.com/en-5.jpg
Where it stands now -
http://www.drewbaker.com/en-painting.jpg
--Drew
