I use Corel Paint Shop Pro Photo X2.
For the sharpness - I always try to pick high-quality images to begin with (I don't work well with screencaps) - my program has a tool "One step photo fix" which I generally use on all of my base pics, which helps brighten and sharpen a little. Then, throughout the banner-making process I'll copy merge, sharpen, reduce opacity several times, sometimes erasing parts that look too sharp. If I think it's looking over-sharpened, I'll copy merge and do a "One step noise removal" which smooths everything out, followed by another copy merge+sharpen+reduce opacity. Basically, experiment til I think it looks good, lol.
My colouring is mostly experimentation too, depending on my base pics and the overall feel I want to go for in the banner. I use colour fill layers and adjustment layers (Curves, colour balance, channel mixer etc.) mostly - with some of my program's ready-made tools (eg. sepia toning, film filters, time machine) occasionally. Sometimes textures add colour, too.
Were there any particular banners that I've posted that you want to see how I did the colouring? I save all my .pspimage's so it wouldn't be difficult to write up some colouring 'recipes'.