I'm not an expert, but here's some advice about photos. ^__^
♥ Put some thought into where you photograph your items.
Think of it as a mini photoshoot ^^ You don't need a fancy place to take good photos. It's very easy to set up a nice photoshoot location~
I usually take photos for my shop beside my bedroom window, where my dresser is. My shop sells cute-theme items, so I cover the top of the dresser with a cute, but not busy fabric.
Then get "props" that match your theme. I use things like doilies, my snowglobe, a teacup (not all at the same time) to create an interesting backdrop. These are not the focus of your photos -- obviously that should be the item you are selling! -- but they create an atmosphere. Don't let an ugly background detract from your awesome items! I never understand why some people on etsy shoot their items on their old tables/towels/very unmatching construction paper. :/
♥ Shoot in natural light.
You can shoot pretty much any time as long as the sun is up. I've even shot just an hour or two before sunset and got good pics. I just had to post-process them afterwards, to make them brighter. Items look better in natural light than overhead lights or lamps.
♥ Use http://www.picnik.com/app to process your photos.
You can adjust the size, contrast, exposure, etc of your photos very easily here. You can also add your shop's name to your photos. Photoshop is overkill for this kind of thing!
♥ Take multiple shots of each item.
From different viewpoints, as well. Etsy gives you 4 photo slots for each item, so use as many of them as you can. Taking multiple shots will also give you more to choose from later. Not all of your shots will turn out right, so it's good to have extras.
♥ Learn when to use the macro function of your camera.
Use it when you are shooting close to the item. The picture will be a lot clearer. When shooting from farther away, turn off the macro! Otherwise the photo will be fuzzy.
♥ You don't need a fancy camera.
A point and shoot digital camera is fine. :)
Here's some examples of photos I've shot for my etsy shop:



Hope this helps!