Photoshop

14/02/10
Some of you might remember the good old days of hand colouring black and white images. Here is what you do in Photoshop:
Open your image
Convert it to black and white.
Make sure your image is in RGB mode: Image > Mode > RGB Color
Create a new empty layer: Layer > New > Layer > BEFORE you click OK change the "mode" from normal to color (second one from the bottom)
Now choose your brush tool and any nice colour and start painting! To choose a different colour just double click on the black or white little square in the tools palette

Modifications:

(a) Don't forget you can change the opacity of this layer
(b) Don't forget you can also change the opacity of your brush to get subtler colours
(c) You can also select parts of your image and use the fill tool: Edit > Fill

Important: Red Eye Removal

The above method also works very nicely with red eyes! Just choose a colour close to the original eye colour and paint on a separate layer (which needs to be in colour mode) and voila a nice way of getting rid of red eyes!