Try this http://www.lfs-gear.com/TUTORIALS/Tutorials.html I recommend using a software like Adobe Photoshop to easily manage decals. I hear http://www.gimp.org/ is good too. It's free unlike Photoshop.
Quote from Sampsami :Somebody can paste here 512 pix. undesigned skin? you might want to use 2048 pix. version of the default skin. LFS-gear.com -> download for Example FBM pro-kit. Get GIMP -> open the FBM pro-kit with GIMP and start skinning.