If you are interested in what can be accomplished with Photoshop, go there.
Go to the 2D section.
As far as I know, when you're professional at Photshop (or compareable software) you don't draw with the mouse, but with special pencils on special surfaces (don't know the english names :S).
I didn't watch the video, but since it's about game characters, my guess is, that those are 3D models, created with either 3d studio max or Maya. For the textures, well those are still drawn in photoshop and the like.