I know how to bake textures :
1 - create a nice model
2 - unwrap it and texture it.
3 - add a nice illuminacion
4 - prepare a new unwraping for the new baked texture becuase uvs should not overlap
5 - in mesh tab , uv texture panel, do the right settings to bake in a new image from what is in the original uvmap.
the result is always, even a bit streched , it seems to have always jpeg type of artifacts , the is a lot of mipmaping ( :no: )
it just loooks ugly.
i think baking could give much better results.