Time to break one of the major rules of 3D lighting, ambiance. CRANK IT UP!

About 50 is good, look at it with no light. This is how dark your shadows will be. Pitch black shadows on toon characters look nasty (unless you've got a black/very dark bg)

This is the toon shading setting I use:

One tick at 60%

A nice skin tone color to use is: Red 255, Green 225, Blue 215. Specular Intensity 0.

Ambiance: 50

Let there be light! Drop in a sun light with shadows, White at about 80%.

Lookin nice, but something's missing.

Key Light: White, 80%
Ambiance: 50

Gradient Materials are your friends!

They keep the colors from looking so darn solid and bland, just go from a darker color to a lighter one, you dont always have to do a major color change (like this characters shirt) .. but just a slight one, the top of this characters hair is darker than the bottom, but only by a little.. it's barely noticeable but helps a lot.

There are gradients on the boots, pants, arm sleeves, shirt and hair. I didnt put any on the skin color tho.

Personally I like this look, but others prefer some more shading on the character, so...

Key Light: White, 80%
Ambiance: 50

To get this look you need to change your shading properties to:

Two ticks, one at 60%, another at 0.

Re-arrange your lights:

The key at bottom right is set to 40% with shadows. The 2 others are fills at 30% and no shadows.

Voila! There you have it!

Key Light: White, 40%
Fill Light: White, 30%
Fill Light: White, 30%
Ambiance: 50

Lately I've been shading my characters like the character to the left.
For your gradient shader you need Two ticks

The bodysuit
The first at Position 100% and a Object Color value of 100%.
The second at Position 60% and a Object Color value of 60%.

Skin
The first at Position 100% and a Object Color value of 100%.
The second at Position 35% and a Object Color value of 60%.

I only use 1 Klieg light with Z-Buffered shadows! Raytracing your shadows will give you a harsher edge which I dont care for.

Also, I set most of my ambient levels to 35%. Higher for things like eyeballs, teeth and fingernails.

For otherwordly demonic creatures, try this trick.

Setup a gradient, set XYZ values for Start and End all to 0. Edge Thresshold of 30% is pretty good.

At first choose red and blue as your 2 colors. render out a quick frame and determine which attribute is the rim light, the color that only shows up at the edges.

Now set both attributes to the same color, then turn on GLOW on the Rim attribute. Increase its ambiance so it's a little brighter than the other attribute.

Your character will give off a slight glow now, making it look more out-of-this-world.

You can also change the main color attribute to a Turbulence gradient to keep the skin from looking too solid, but not necessary.

Don't forget to turn down your Glow Intensity! Glow intensity is found by clicking on your Choreography name, for some reason it's always defaulted to 200%. Way too bright.

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