Here's a good online tutorial - it's making flowers and stars for applique, but the technique can be applied to any shapes. The only thing I do differently (because I was taught to do it this way) is I paperclip the edges of the fabric over the paper template before I begin basting - this just keeps it securely in place so you're sure to baste it neatly and securely.
http://www.youtube.com/watch?v=yDrTVi0jk6w
As for cutting the paper templates, I generally use my ruler to mark up the shapes I need on the lightest weight cardboard I can buy from the newsagent, and then cut them out with scissors. But I like Virginia's idea of using a dull blade to cut the paper! That would avoid my slightly wonky hand-cut templates. :)