Peruse the Agile Modeling site which pushes for "just enough" modeling. They have some great guidelines including a full "agile modeling process" from requirements gathering to design/development.
http://www.agilemodeling.com/
http://www.agilemodeling.com/essays/amdd.htm
http://www.agilemodeling.com/essays/agileArchitecture.htm
http://www.agilemodeling.com/essays/agileAnalysis.htm
http://www.agilemodeling.com/essays/agileDesign.htm
As for tools, I love Visual Paradigm. It's relatively inexpensive (compared to other tools). There are a variety of free modeling tools (google is your friend), but none compare to Visual Paradigm, and for bit that it costs, it's well worth it. If my employer didn't pony up the cash for it, I would buy it myself... :)
