I would look at the wire skin in the character tool, make a small change, go back and look at again, make another small change, and just keep doing that over and over again until I made something that looked about right. Eventually I got a decent looking base skin this way, but it was a lot of work. A much easier way would be to download one the base skins available on the web, or use one of the original Irrational skins as a base and paint over that.

SIZE
When making a skin I work oversized (1024X1024) and reduce it when I finish. This lets me get a lot more detail into the skin then if I work at a smaller size from the beginning. The standard size for skins is 256X256, although they look much nicer at 512X512. Traditionally I've made my skins 256X256, but lately I've been opting for the 512X512 instead.

COLOR
I usually start off in black and white, and add the color on as transparent overlays when I finish. However, if I am working with a color photograph, I might work in color from the beginning, as this usually looks nicer than colorizing a black and white photo.

REAL PEOPLE
My skins of real-life characters from TV shows and movies and stuff are based on real photographs of these people.

First I search online for photos of the person I want to skin. The photo has to show the face looking straight forward, not off to the left or right. I try to get about a dozen good pictures, because I'll end up going through several before I find one that works out.

It's also helpful to have some 3/4 or profile views to use for the sides of the face.

Next, I experiment pasting different faces onto my base skin until I get one that looks kind of right. The most important part is to get the nose and mouth lined up right at this point... the eyes are probably going to be off, usually to high. You'll probably need to stretch the photo out to get it to match the mesh.

Next I'll need to erase the eyes that are too high (paint over them), and usually paste a new set of eyebrows on top of the old ones (they usually need to be longer and wider and closer together than they are on the original photo. I will also need to repaste the area around the eyes (eyelids and bags under eyes) so they line up with the mesh.

Next, I'll add the eyes on the skin, using a photo of the actual eyes if I can find one with enough detail, otherwise I just recolor the eyes on my base skin.

Next I'll paste on the sides of the face and the hairline from my 3/4 or profile photo, or paint them in by hand if I don't have one.

I will probably touch up the face with some airbrushing and blurring and blending where needed -- both to further define the facial features, and to blend the photographic parts with the digitally painted parts.

Still, there's a lot of trial and error involved when using photos. After all this, it still might not look right. I tried doing this with my President Kennedy skin, but I could never get it to look right, and ended up just drawing him a face using the photos as reference. Sometimes I end up doing so much airbrushing and redrawing that none of the original photo is left by the time I finish. Often times I need to exxagerate prominent features from these people to make them more recognizable, so it's kind of like doing a caricature instead of a more realistic image. Other times I hardly have to make any changes at all. With Ponch from CHiPs, I was lucky to find a photo that fit on the mesh almost perfectly, and very little alterations had to be done to it.

The most important thing is trial and error, constantly going back and forth between my image program and the character tool to see how it looks, and making lots of little adjustments.