This tutorial explains how to make palettes for pixel shading in Photoshop 5.5
1. Create a new image 10 pixels tall, 50 pixels wide (it will be a 5 colour palette).
2. This is what it looks like (zoom in x5 and normal).
3. Pick a gradient fill tool on the tool bar.
4. Click the Edit button on the Options window.
5. Make a new gradient and edit the way you like.
6. Fill up the image.
7. Choose Filters=>Pixelation=>Mosaic on the menu at the top. Make cell size 10. Save the palette in .gif or .bmp for later use.
8. Doll made with this palette: