Here is my current photo set-up.
I built a small lightbox out of cardboard and tinfoil. I use a single bulb in my desk lamp to light it. It is not even a nice daylight bulb or anything. Corvus Miniatures has a great set of resources on making a light box. They also have free backgrounds that I downloaded and printed to use. I generally followed the directions there.
Here you can see the lightbox. For these pictures I used sunlight as the light source. A lamp works better, the direct light tends to wash out pictures a bit.
This is how I set it up with the lamp. The brown sanding block shows where I usually have my camera. I elevate the model a bit and put it on a little display base as I think it looks better than floating on the background. I put the lamp close to the booth. I then shoot pictures with the camera sitting on the base (so it is steady) and from above and below angles. I rotate the model and take pictures of interesting bits. I try to focus on getting dynamic looking pictures that show a "model's eye view", and not just pictures from above as you often see.
My camera is just an old (like 6 years old) Canon Powershot. I take model pictures using the "Indoor Setting" scene (it seems to give good balance), macro mode, and a 2 second timer delay (to minimize shake). I use iPhoto to crop my pictures. I then upload them to photobucket and do a little bit of colour and brightness corrections. I usually don't need to adjust very much using this method.
This picture was taken in the very basic lightbox. This image has had no corrections done using software. It has just been cropped.
Here is that same picture taken with the lightbox removed. It is still alright. Not sure how the colour balance would be if this were a painted miniature.
Here are a few of the better pictures I have gotten so far using this method:
To improve on this setup I am planning on getting a dayglow bulb for my lamp and getting some background printed at higher quality at a printers. I will update when I change these two things.