I've created flags with corporate logos but have yet to determine what tool(s) to use to shade it so that they look like more realistic flags.
I can either perform this in Photoshop or Illustrator.
I asked a questions similar to this yesterday and was pointed to the direction of a great tutorial under AE, but I am unable to get a version of AE and this is due .... actually yesterday.
If anyone has suggestions on how to shade an image to look like it's a flying flag, you would be my hero.
I think there are some plugins that would give you a desireable effect. Try http://www.alienskin.com their Xenofex has a flag plugin that looks pretty good.
I have had great success with painting shadows and highlights on a field incluging the logo then turning image on it's edge deform the entire pic repeatedly with DISTORT - SHEAR. Gives a great look... Maybe I do the bending in SHEAR first and then paint in shadows on one side of the deformation and a highlite at the crest on the "lumps".