By now I assume you've got animating down pat, and are now looking for ways to spruce up your avatars and make them look fancy.
You'll be quite happy to know that adding effects is a BREEZE compared to making an animated gif, and if you're familiar with basic Photoshop uses and understand the concept behind layers, you won't have any problems at all.

But for those of you who are new at this and need a little run-down, this is the place for you!

The first, and most important thing, that you'll need to understand is layers. Basically, each individual item in a file is placed on it's own layer, and sometimes based on it's position (top, middle, bottom) it will appear differently than it is in raw form. Like you put your main image on the bottom, as background, your text in the middle, and your color effects on top. Together they mesh and will form your finished project. But you already know this, right? Yeah, I realize I'm HORRIBLE at explaining things.
Anyway, working with animations is essentially the same thing, except you happen to have a TON of layers. If you treat those layers as "one" and work your effects around them, you'll have no problems at all. Think of it as watching TV through a window. You're on one side, the TV is on the other, you're not actually changing the TV image, but if you say, paste some red cellophane or stickers on the glass, the TV image will appear altered, even though deep down it really isn't.

Got it? Good! :D ;)

So, when I'm working with an animated file in Photoshop, I mentally split my layers up into three groups, Background, Animation and Foreground. The background group is all the layers that I want to be UNDER the animation, such as the well, background, and anything else that doesn't cover the animation. The animation group is the bunch of layers that compose the animation.

It is important that while you edit your file, you do not alter or touch these layers in any way, unless you have a real good reason to. ImageReady can be notoriously picky about it's files, and if you so much as have the wrong layer selected when you send a file from Photoshop to ImageReady, it can mess all your frames up and you'll have to do the whole animation process all over again.

I've recently discovered something that just might make accidentally messing with your layers a thing of the past, plus it saves you a lot of scrolling time and keeps things neat and tidy. And what is this wonder tool, you might ask?

Sets!

Basically what these are are folders, much like what you find on your computer's hard drives, that you can put layers in to keep them organized. It's advantages include keeping things separate yet still functional, just as if the folder wasn't there. Plus, you have visibility control over all the layers in the set instead of just one. Also, I haven't tried this yet, but I'm guessing that it makes moving layers from one file to another a lot easier.

To make one, just click on that little button highlighted above, and then name the set anything you want.
Select all the layers you want to go in the set (holding down Shift and doing Control-C on layers you want works great and will save you a lot of clicking, but don't think Photoshop lets you do that to layers; as far as I know only ImageReady does), and just drop 'em in there.

See how clean and tidy our file looks now? And the animation layers are still there! If you click on the little arrow, all your layers will show up and you can do whatever you want with them.

Anyway, great little option that is great for neat-freaks like me. *cough* Okay, let's get back to doing effects!

So, what were we discussing before I went on my lovely little rabbit-trail. The Three Groups of Animating? Oh, right. I discussed Background, Animation, and...now Foreground. The foreground group is possibly the most important, as it's where you put anything you want to show up OVER the animation, regardless of placement. Text, borders, coloring layers, brush froufrou...it all goes up top. It's the stickers on the glass. Just remember that. Vitally important analogy, that was!
;)

Allow me to demonstrate.

See all the layers up top? That's my Foreground group. You can see the black border layer, the text layer, and the layer for the white border brush that I used around the images.

This is my Background group, and it's got the blue sky background (duh) and the static, or still, image. Although that really could have gone in either groups, really, since it doesn't touch the animation and doesn't effect it's final appearance.

So, that's basically the gist of the matter. Obviously you can be as simple or as complicated as you want.

Just remember the Three Groups, and that anything that is going to affect the animation's final look needs to go on TOP of it.. Even things that you normally wouldn't put on top of an image layer. Remember, you're working with an insane amount of layers that all have to be exactly the same, so you can "cheat" when it comes to a few things to make your life easier.

For instance. Want rounded corners on your animation? Going to each individual layer and cutting it simply is not practical. So I'll take my background image, "cut a hole" in it, so to speak, and put it on TOP of the animation layers, so the animation shows through the empty space.

That way, I have the illusion of rounded corners, when really, you're just looking at a regular square animation under a cut-out.

See what I mean? You can you be as creative as you'd like. Want a star shape? Go for it! Prefer swirls? Nothing keepin' ya! Even want to blend the animation into the "background"? No sweat! Just remember, inverse and cut-out. The possibilities are endless!

Anyway, you've got all the information you need to make your animated avatars practically dazzling, so go off and do it! Shoo! Don't need you any more around here!

Although a lot of hits and nice feedback is always appreciated. ;)