Diffused light; direct lighting can be too harsh; open shade outside, bounce flash or incandescent lights indoors, makeshift light tent, lit through the sides. A medium to large, translucent white storage tub works fine. . Maybe $10 at WalMart. Cut out most of a long side, and maybe a hole in the top, for camera access. Then invest in some sort of attractive backgrond material....granite floor tiles, material, plastic sheets, the possibilities are endless. Light...electronic flash, incandescent bulbs...GE Reveal are good, but, I have only seen them rated up to 100 watts. Then, let the camera work its magic! Auto or Incand. light balance works well. Check out Strobist and go trough the archives till you find the tutorials about photographing small, shiny objects.
Oh, Woops! Just saw 3-way Reveals at WalMart yesterday. 50-100-150 watt. Great! Use low for setting up, then full bright for the exposure . If you can find a pair of gooseneck lamps wityh 3-way switches, that'd work great! Adjust your lighting easily. +1 on the Picasa edit program.