1.) Software/Program: I'm using a program called Paint.net to put together the pages. It's a free program that you can download from their website. They say it is very similar to adobe photoshop and has a lot of the same tools. I could never figure out photoshop, no matter how much I played around with it, plus it's expensive. I find paint.net to be SOOOO much easier to use. I adore it.
2.) Scrapbooking Kits/Papers: You can find these downloadable for free all over the internet. I basically just did a google search for digital scrapbooking papers/kits/embellishments until I found what I was looking for. Of course, there are also several sites that offer kits for a price too, which is usually pretty reasonable. We're talking like $1-$2 for a kit that would cost anywhere from $8-$15 if you bought it in paper form at the store. That being said, Shabby Princess has some really great kits that you can download for free.
3.) Tips/Suggestions: Um... well, I really just got started, so I don't really have a lot to offer by way of tips. I just downloaded everything I wanted and went through hard drives of pictures to find the ones I wanted, and then just started playing around with it. I will tell you that if you want to put an embellishment on your paper with a transparent background you have to click "paste into new layer" on paint.net or it will just paste it in with an ugly white square behind it. There are plenty of tutorials and lay out advice on the net though if you get stuck or need help, just google it. That's really the best tip I can give. That and just keep playing with it, you'll figure it out. That's pretty much how I do it.
This is a page I did of Nadia as a baby using a few of the different kits from Shabby Princess! Have fun with your digi scrapbooking!