Painting figures can be a very delicate and time-consuming process, but it is also one that makes the scenes on your layout more believeable.  There are many figures available for our garden layouts in various scales.   Preiser is the one most commonly mentioned name in the model railroading world, but as reviewed in a recent (December 2005) Garden Railways magazine, numerous other manufacturers are in the market making figures for our various scales. Two members of our club own a line called "People You Need to Know", which are Victorian or turn-of-the-Century figures. 
    One of the main reasons to paint your own figures is price.  Unpainted figures are considerable cheaper than painted figures.  I feel that with a steady hand you can populate your layout rather inexpensively, and have much better looking figures to boot.  You can also use these techniques to repaint any pre-painted commercial figures.  Marcia paints and repaints many of the figures that we use on our layout.  She finds that she can do a better job than the factory, and can also vary the clothing colors so that our figures do not look like everyone else's.  She has become very skilled at this, and has found it quite enjoyable.  I have seen figure work by Richard Schmitt which is definitely museum quality.  Judy Odle has done some great figure painting for their layouts and for others.
    One problem with factory painted figures is the finish.  Quite often figures have a high-gloss sheen, and the colors range from garish to grotesque.  Quite often the facial features are painted like a circus clown, especially when you look at the red lips on the Aristo and USA Engineers.
    Begin the painting process by cleaning any flash or mold lines with a hobby knife. Smoothing the surfaces with a piece of fine emery paper is also a big help.  When you are done, scrub the figures with warm water and dish detergent to get rid of any oils and let them dry on a paper towel.  I then use an air brush to spay them with a fine coat of skin color.  I usually start with a mix of two parts Poly Scale 505212 (Flesh) and one part Reefer White. I add 25% Poly S airbrush thinner for spraying.  Vary the amount of white to give your figures various different skin tones.  For Afro-American figures mix Poly Scale Roof Brown, Flesh,Grimy Black,and Black to get various skin tone shades.  Other good flesh colors are Modelflex 16204 Light Flesh, 16205 Medium Flesh, and 16206 Dark Flesh. Note: Resin and metal figures often require a spray of gray primer before you move to the flesh tone spray.
    Now comes the fun part of the process. Using fine-point brushes, paint individual details. Use water based flat colors such as those found at craft stores.  These paints have a very smooth consistency, brush well, and dry flat. They are easy to paint over if you find that you have made a mistake, and brush clean up is with soap and water.  Remember to keep your brush wet with paint, and push the paint carefully to the raised lines that define clothing edges.  Touch up any mistakes at a later time when the paint has dried. 
    Be sure to keep clothing colors consistent with the era you are modeling. Older period clothes are not as bright as the more modern clothes we have today.  Solid color clothes are easiest to paint, but stripes or polka dots can be done if you have a steady hand. 
    Hair color can be varied by mixing colors on a scrap piece of plastic or foil pie pan.  For blond hair, use a mix of yellow, white and brown, and vary the mix as you paint different figures.  For darker hair colors, you can use any color from light brown to black.  Don't forget gray hair on your more "distinguised" figures.
    I have found that the best way to highlight lips and eyebrows is with a sharp pencil.  A standard graphite or brown pencil works well on eyebrows for most figures, with pink for mouths and of course red for a female figure's lips.  Brown or blue pencils can be used for eye highlighting.
    The final touch for your figures is to paint them with a thin wash of black or dark brown to highlight any creases or wrinkles in clothing or skin.   This wash should be made very light with 1 part black or brown to three parts water and dish detergent as a wetting agent. Practice with your wash on scrap material until you are satisfied with the effect before you brush it over a freshly painted figure.
    By following these tips you can make your figures really stand out, and look different than those on other layouts.