Here is the finished product:

I think it's best to use a font with a bit (haha) of a pixel-feel to it. I don't know why, they just work better.
Step 1.
Pick your font and type in your text.
I'm using "Minecrafter 2.0" as this is what I use for most of my projects (I design Minecraft signatures here).

Step 2.
Colour your text however you like, I usually select the text and apply a nice gradient.
The base you've just created will be the front face of the text.

Step 3.
Apply a drop shadow. (I can't remember which plugin this is, but I do know that it is a plugin).
I find that it is better to have your X and Y offsets match the widening radius.
This drop shadow will become the sides of your 3D text.
I normally go with white, but in the screenshot I have used light blue (don't worry, it gets better...)


Step 4.
Apply an outline. (again, the name of this plugin escapes me).
You can use any colour, but black never fails for me.


Step 5.
[Optional]
Use the Soften Portrait effect to give the text some warmth!


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