Great typography is a state of mind.  It comes with experience and knowledge.  You can gain a lot of knowledge (cut the learning curve) by going off of other's experience.  One important way that you can do this is to just study typography (and graphic design) everywhere you see it; in print, tv, ads, brochures, flyers, posters, signs, entertainment packaging, billboards, books, the web, etc.

There are some killer plug-ins you can get for Photoshop that will expand your options.  I don't use them because Adobe doesn't want me showing 3rd party filters on my recordings (fair enough).

The options within Photoshop to create great typography are virtually unlimited.  A killer font collection is half of your work done right there.  Knowing which font to use effectively for your particular situation or project...that's the important part and if you are a "natural" it should be an enjoyable process.  For example you wouldn't put kindergarten block text with a primetime drama design.  As a designer a lot of this is instinct.  You want type or "copy" that is going to "synergize" with the overall effect of your design and like I said, a great font portfolio is a huge headstart.  Knowing when to use what font is most of the rest of the battle.  Then you can do minor things for improvements that will push the typography to where it should be: perfect for the design.

Photoshop has plenty of layer effects that you can use under "Blending Options"; such as drop shadow, outer glow, satin, gradient overlay, etc.  The more experienced you are with these effects, the better you'll have an idea when they can come into play.  A lot of times, after you've chosen a few options for a font; fool around with the layer effects to just sharpen it up (try out a shiny bevel, create a new gloss or overlay, etc.).  Try out the layer effects on the different fonts if you're still unsure exactly which font and see what works best.

Ultimately you want the typography to balance with the rest of the design.  The importance placed upon the typography depends on the design itself (ie. books, ads, magazine covers and flyers rely heavily on typography).  It's worth taking the time on typography because it will enhance the overall quality of the design.

Some designs will rely on the text "copy" design itself while other designs will rely less on the type and use a more traditional approach.  Party flyer's will often spend a lot of time on the typography and adding cool effects to it.  Learn from and expand your collection of fonts, develop the ability to just "know" what font would work with an idea or design concept, and take the time to improve upon the quality of the "copy".  Attention to detail makes a difference.  Oh, and don't make any spelling errors or typos. 

Look for a upcoming article or tutorials on practical typography (it is important!) as I just got back from Scott Kelby's session on Typography at PhotoshopWorld West (ok I didn't just get back...).  Interactive .psd files of finished designs are a great way to study all of the elements involved such as typography.  You can get hundreds of these included with my Photoshop Designer Training.

- Article by Orion Williams copyright 2004