For beginners I would suggest either the Staedtler or Faber Castell brand of pencils. These produce significantly better results than bargain bin pencils, provide good colors and allow you to try some simple shading and blending techniques. With practice the best coloring results can even be achieved with the most modest tools!
There are lots of ways to tint your fabric for embroidery, with the most common being crayon tinting. In this post, you'll learn a few methods to try. With all of these versions of tinting, it's best to add the color before you start stitching. While it's possible to add the tinting after your embroidery is finished, it's much harder to color all the way up to the lines and without getting markings on your thread.