I use Picassa as well as PS. Picassa has a bunch of one click tools that handle things like glow, sharpness, saturation, warmth, colour filters, B&W etc. which makes it easy to see changes on the fly before saving. I use PS mainly for when I want to add layers or text for things like realistic photo effects adding light sources or lens flare.
As Flakmonkey says it depends on the look you are after. I mess about with an image until I get something that I like then post it to see what others say about the images.
An important part of the process for me is how you frame and compose the shot itself. Play around with the camera movement controls until you are comfortable with what they do. A helpful hint is to pause the game which allows you to stop the action and move the external camera to wherever you want it so that you can compose an interesting shot. Look at where the light is coming from and use interesting light and weather features to make the shot more interesting.
Take a browse through the screenshots thread for some ideas on positioning and framing.
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