Admittedly my ground work is a little on the light side. I usually try and start with at least some semblance of a sketch or drawing but since I think that keeping things loose in the begining will allow me to keep things loose throughout the piece, they're not much more than a scribble. I'll do them on pretty much any piece of paper I've got handy. I've done them in sketch books, on typing paper, on note paper and I've even got a few on old envelopes.

Once I've got an idea of what the composition is going to be and generally how the piece will look I'll then scan the drawing into the computer.

I like to save my files as Photoshop documents. I find that though I paint almost exclusively in Painter (version 7 at the time of this writing.) I do all my editing in Photoshop and since Painter handles Photoshop files so well I tend to just leave them that way.