What Tim said:
Definately vertex weighting, it's only needed for maybe a couple of verts at shoulders, elbows, kneecaps usualy.
And expanding on what Pongo said:
When modeling give some thought to the characters limbs range of movements.
You idealy want the 'rest pose' of the mesh to be a sort of average center of all the animations it will have, so there's the least amount of deformation required from the 'pose' or static position, to the extents of the deformations of each anim cycle.
Consider this a top down view of the rest pose of an arm. (s)houlder, (e)lbow, (h)and
h
/
s--e2 anim poses (or extents they may reach within an animation) might be: straightened
s--e--h
and: fully bent
h
\
s--e
The range of movement from rest to either extent is equaly small = minimal deformation
However, if the rest pose was like the straight arm (as in a classic 'T' position many people seem to use), then the range of movement to a fully bent arm would be large (at least 90 degrees) = a lot of deformation at the elbow.