Glad you like it!

Please PM me a note with a screenshot please.

I make a new layer for each color so they can blend into each other softly (I mess around with the opacities and blending modes). I also use layer masks to erase around edges to "mold" colors into a nice soft shape too (with a large airbrush). I may merge these layers together later if the file size gets too big. All layers are grouped within a vector mask to keep me organized and their edges nice and clean.

Glad to help! I do not have CS6 yet, but I am definitely intrigued by what the new Illustrator can do! Especially if the upgrade does not have a RAM limit, like how Photoshop CS5 currently runs (one of my favorite new features).

Actually I do not recommend the magic wand tool, because it selects a certain color base, with a lot of random fuzziness that results in pixellated edges. (unless you're only selecting 1 out of 2 colored areas) Using the pen tool to create vector masks is the solution to make the cleanest edges possible. It shouldn't be too much different from vectoring shapes in flash.

To rate the tools available, my selection/edges hierarchy goes like this:
Group vector mask > painted group layer mask > lock transparent pixels (when working on a single layer only) > polygon lasso tool > magic wand.

So you can see I only use the wand tool as a last resort. Although it may be the fastest, the randomness you can't control on its edges really brings the overall image quality down, which other viewers will easily notice. Plus once you make a mask, you only need to create it once, as opposed to having to reselect the area you want over and over, so in the long run it saves time too.

Is there a reason why you must settle on the wand tool?

I use layer masks separately from vector masks for non-destructive erasing. Basically I can soften and fade parts without permanently erasing them - and if I make any mistakes I can just paint back with white to bring parts back.

Thank you for the tips

Well let's see. I typically only use photoshop most of the time, since all the tools are already there pretty much. (And illustrator tends to be buggy and freak out/crash sometimes) When vectoring in photoshop, you can try export>paths to illustrator, but I haven't tried that before. I have worked in illustrator and exported the file as a psd, which keeps all your layers (but everything still becomes rasterized in those layers). An .ai file is illustrator's basic save file, like how it's a psd for photoshop documents. Saving it as an .eps in illustrator keeps some vector qualities, because when you try to open it in photoshop it will ask you what size you want it at. However, once you choose a size, photoshop rasterizes the image at that size. Eps is used for stuff like print making and other related graphics. (However, if you use some fancy gradients and stuff, I have noticed some visible color/quality changes after exporting it as a new file like an eps. So just experiment and see if the quality drops) I would say avoid jpegs, and try pngs or even pdfs if you want a higher quality flattened image.

So unless you really need to, in my opinion it's better/easier/more efficient just to choose one program and stick with it for a project you're working on, instead of switching back and forth all the time. But if you want to switch around, it's better to start in illustrator to draw your lineart and basic shapes, then export it as a psd to add painting and special effects to it in photoshop.

I hope that helped!

Glad you found it useful!