For mine, I do all the line art on paper... If I had a tablet, I'd probably [try to] do everything digitally.
I do all the lineart on paper, including the inking, usually; even though I have a tablet. You can always clean it up on the computer, though I confess I rarely do (though my drawings could benefit from it
)
There are other ways I sometimes do it (or used to do it). One was to hold shift and go around a sketch creating the outline with lots of little straight lines (which requires you to have it set so Photoshop doesn't recognise tablet pen sensitivity). It makes the image... well, a little angular, though just how angular would depend on how many long or short lines you use. That was when I was really bothered by the fact I could never seem to get my lines right.
Another way, which is better, was to just choose a brush type and size, and neatly sketch the outline (usually i'd have a previous draft sketch of whatever I'm drawing below. Maybe something I scanned in or just sketched on the computer), with the tablet pen sensitivity on. If I made a major mistake I could always undo it via the history window, or if it was a minor mistake I'd use the eraser tool afterwards.
However, since your history window would probably fill up pretty fast using this method, it would be good to make some 'history snapshots' or whatever they're called relatively often. You do that by right-clicking on the action showing in your history window and selecting 'create new snapshot' (if I remember correctly). Name it, and it'll appear at the top of your history window. If you ever make a mistake and can't go back to before you made it because of the limit of actions shown in the history window, you can click on the snapshot and it will load your image as it was when you created that snapshot.
...Oh, and if you can't see the history window, go to 'Windows->History' and it should appear.
But mostly I just do my lines on paper. I've been drawing a few comics, and use the computer to create the frames for the page; then I print that out and draw the pictures, ink, and scan it back in. I have copied the inked version of my comic and coloured it by hand on the copy before re-scanning it in before... but though I like colouring things in with my tomo pens by hand, colouring on the computer can give a neater image. Not to mention that working with so many copies can degrade quality and can be just plain annoying.
Er... which leads me to section 2: Colouring.
Generally I colour a picture a bit like someone else described it: like a colouring book pic. I create a new layer for each colour or segment that I'm colouring. Afterwards I sometimes use the dodge/burn tool to shade; though if you use the brush tool and just use darker colours for shading, you have a lot more control and can achieve a higher quality with some effort. You may want to ctrl+click the layer with the base colour you're shading over to make sure you don't go outside the lines, though. And since this way you
might create hard edges around your colour, if the edges are showing and they look too hard, you can always make them softer with the eraser tool.
Usually I just opt for the quick way: dodge and burn tool though.
Sometimes instead of filling a segment or part of the image with just one colour, I use a gradient to fill it; it can create an interesting look. o_O Though I think I prefer just a normal base colour.
Cel shading... I don't use this too often, but it's a good method too. Just depends on what look you want for your picture/comic/image on whether you cel-shade or try for a more 3D shading effect. I like to use a soft-edged brush for where the colour/shadow/light I'm applying meets the base coat to make the blend between these colours/shades softer. But the rest can be filled in with a hard-edged brush.
Er... and that's kind of all I can think of at the moment.
That's how I usually do images on the computer, though I've been doing more free-hand recently.
There are quite a few tutorials on the internet about this sort of thing. I can suggest a couple if you;d like; just ask me via PM.