The lighting was a basic 3 point lighting. I added smaller lights as necessary to hilight other objects. For details like the eyes I went back in and painted any parts that I thought needed it. Often i add a little hilight to the lower rim of the eyeball to give the impression of moisture in the eye. Hope thats a help.
I also played with the curves on photoshop to eliminate any heavy shadows.
As for cycles, you probably need a pc that can gpu render. I mostly use an Imac, its fine to render small scenes but for any really large scenes it just isnt fast enough. I have a pc that is much faster that I use for large renders. Also dont render what you dont need. If you are making an image of several layers and part of the image doesnt need as much detail you can render it at lower detail and composite the elements together after.
How long it took with your PC to render one frame with Cycles, I would be interested of average time? I will be rendering Full HD frames and wish to achieve render quality a bit like your animation. I am worried about render times.
When it was actually rendering in cycles it took about 2 to 3 minutes per frame for the detailed parts.
But for the video the elements were pre-rendered and then assembled in the Video editor, it is much quicker to render, just a bit slower than actual playback to render. For Example, the phone was rendered in cycles, but the screen of the phone was a seperate poly with video of the game mapped onto that was rendered in Blender internal and I put them together in the video editor.
For the Grandpa character I rendered out a pose and the mouth positions as an overlay and dropped them into the timeline as necessary. The reason I did this is because that is how I had to work on the Iphone. If i had the time I of course would have liked to do a full motion animation for the video.