What program? Is it different in elements and CS3?
I don't think your shadows are crap, but I'll indulge you.

Actually, shadowing is something I fiddle with endlessly because I never seem to get them just right so I'm a always insecure about my own too.
But here are my basics...
I use CS3. When I add a drop shadow, I always draw the color for the shadow from the background paper (I just take it deeper and darker). They almost always look very nearly black. But there's a hint of color there that makes them a little more realistic looking (I like to think, anyway, lol).
Then, I set the angle for the shadows depending on where the light source seems to be coming from in my photo. So, for example in this page:
The light source is coming from the left, drawing shadows to the right side of my DD's face. So...I moved the angle in the drop shadow to mimic that. Generally, I keep it like that for the whole layout unless there is an element or two that I think needs more depth, then I'll tweak it a little. But not too much so my shadows don't seem too inconsistent. In the case of the LO above, I set the angle for the general shadows at about -175.
As for distance, size, and spread. That is something that is different throughout the layout. But I usually don't fiddle with spread at all. I keep it at 0. Then, I start from the bottom of the page, up. Papers and elements closer to the page have "tighter" and darker shadows. So like 55-60 opacity and a 10, 10 in distance and size. For all the elements, I fiddle as I go "up" off the page. The toppest layer is the lightest and most "hazy".
Elements like strings I keep the distance pretty tight like no more than 12-15 and I keep them lighter in opacity. And I'm starting to put shadows on their own layers to play like that. Then I can warp parts of the shadow and give them a blur to help them look more realistic. I also play with blend modes. But I typically use "multiply" or "linear burn".
But, in the end, I still don't really know what I'm doing LOL! I just play *a lot*.
My biggest struggle is getting shadows to look right on a light or white background. Anyone have any pointers?
Or better yet, anyone know how to do shadows like Dani? I *heart* her shadows.