Here's an explanation of my process for watercolor illustrations.
Click the thumbnails for lager images.

1. I make small sketches with a pencil and a pen to figure out
the best compositon. Then I scan it, and print a copy.

2. I "color" the backside of my copy with a soft pencil (this
is a great technique if you don't have a light box).

3. Then I put the copy on a sheet of watercolor paper, with
the image side up, and trace the lines of the copy. The pencil
on the backside makes a soft copy on the paper.

4. I ink my illustration with a nib. When it's dry, I erase
the pencil lines still showing.

5. I paint one field a time, using watercolors. It's important
not to paint a new color next to a color that's not dry yet
(the colors will run into each other).

6. The finished illustration. Sometimes I adjust the colors a bit
in Photoshop after I scanned it.