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Two relatively simple questions.

1) Shadowing? Is it ever worth trying to show a models shadow? I have never seen it done, and am curious to see if its possible. I guess it would depend on where you put your light source...

2) Shading. I'm working on some cloaks for my Retribution army and was wondering how do determine where to shade? (I'm usually a fan of a wash and then re-highlight, but this time i'm trying my hand at blending so any tips would be nice).

It takes awhile to get shading down right, but for starters look at your subject under a single light source thats positioned the way you want your figure lit. Note the dark areas, take a quick photo if you have to. (works best if figure is primed white)
Then while you paint try to have enough ambient light around so that actual shadows dont throw off the shading you are trying to achieve.
You need to go dark enough, with enough contrast, for your shading to be noticeable or your work will be for naught.