photoshop is used to paint the 2d texture map which is then applied to your 3d model via uv mapping (or camera projecting etc.) UV mapping is a dark art that takes a while to get your head around. But it is a vital skill to master. I suggest you look at the texturing tutes here at SM they would be a great place to start. Or look at Mike's website there is a brief uv mapping tute.
Alan
Technical Director - Framestore
Currently working on: Your Highness
IMDB