I agree, it is addicting!!
We've been using watercolors with a beeswax polish I got from Nova Natural. They are turning out really nice. I like the faded look of the watercolors, but not sure how well it will hold up long-term, especially if they got wet? Oh well, we'll see.
Here's stuff I've been making (inspired by stuff I've seen elsewhere & on etsy...):
A turtle, snail and fish: http://amanda.smugmug.com/photos/435976632_Kp3Yj-L.jpg
Rainbow nesting tunnels (I love these!): http://amanda.smugmug.com/photos/435976315_N29Xw-L.jpg