Eh...my process. First I take it in to photoshop and break the different parts into different layers. There I do the basic colours. I use an overlay layer for my depth and the like. Then I take it into Lightwave and Bake the texture with global illumination
I wish I had some screen shots of my Eyrilus model...catch me on Aim some time and I'll show you.
And to answer your question. It's a matter of prefrence. I find it easier to use an overlay layer.
Hope this helped and I'm sorry you got to see some of 'medicore' work

..hope rpgamer doesnt take offense to that...**runs away**
"Laugh to scorn the power of man..."