I have tried every popular scenery base method (insulation foam, chicken wire, newspaper, etc). They all have advantages and disadvantages, and I guess it comes down to personal preference. Because some of the methods can cost quite a bit of money, and because scenery takes up a good bit of space and is usually thrown away when a new layout is built, I prefer a method that is relatively cheap when used in large quantities. I use the cardboard strips method, which is both cheap and lightweight.
Layer 1: Cardboard Strips

I start off by recycling a cardboard box or two, slicing them into 1-inch wide strips. The width of the strips really just depends on the area to be covered. If the scenic base is rather narrow, I may cut 3/4" or 1/2" strips. A utility knife, a pair of scissors, and perhaps a straightedge is all that is needed here. The strips do not have to be perfectly straight because they will not be seen when all is done. They simply provide structural integrity for the scenic base, while being very flexible to shape into whatever form you prefer.

To obtain good strength and support for the next layer of material, strips are woven together. The strips are glued to each other and to the benchwork using a small glue gun. These can be had for less than ten dollars at your local art supply store. Make sure that you buy a bag or two of glue sticks that fit the glue gun you buy or have. You will be burning through a number of those, and it is frustrating to run out while you are working.
The following three photos show the kinds of shapes that can be made with the strips. It is fun work and goes incredibly quickly because the glue sets within seconds. If you don't like a particular section, you can cut it out with a pair of scissors and reglue it, or you can build another shape on top of what you just did.
Layer 2: Plaster Cloth or Newspaper

Once I'm happy with the overall shape (I usually let it sit overnight to review what I did the previous day), it is time to cover the cardboard strips with something more solid to keep the remaining scenery material from falling through.
My favorite method is to use Woodland Scenics' "Plaster Cloth" (shown here on the right). It works great, but its big downside is that it is around $9 per roll (and going up). A local modeler recommended using Medco-Athletics plaster cloth casting as an alternative. Also check out Ortho Tape (search for "plaster cloth" in their search window). For small areas or small layouts, this is doable. What I do, since I will add more layers later on, is I put down only one layer of the plaster cloth, only overlapping to avoid any holes. The product's instructions recommend to put down at least two layers, but that gets expensive. If you require a very strong scenery base (e.g. you plan on leaning on it in the future), you are going to want to put down three or more layers. With that many layers it does get very hard. My objective is just to cover the gaps leftover from the cardboard webbing. To use the plaster cloth, I fill a shallow bowl with regular tab water. I then cut strips of the plaster cloth in the approximate size that I can handle or need for the area to be covered. I run a strip through the water (don't let it linger), and then immediately place it on the cardboard webbing. It dries fairly quickly, but it is best to let it dry overnight for maximum strength. The photo below shows a portion of my layout covered with plaster cloth. You can make out the cardboard webbing under the plaster cloth. This will go away during the next step.
One day I came up with the idea of gluing newspaper directly on top of the cardboard strips (I'm sure somebody else dreamed this up years ago, but it was a new idea to me). I use the same glue gun, which, again, makes quick work of this step. I cut the newspaper in strips of arbitrary size and glued them in place. I don't worry about overlapping, but I do make sure that there are no more holes in the scenery base. In large contiguous areas I may even use a whole page. The next photo shows a layer of newspaper glued in place on my last N-scale layout. The more layers of newspaper, the stronger the base is. If you are careful placing the next step's layer on (see discussion below), then one or two layers is enough, but remember that newspaper is kind of thin, so you will have to use a light hand during the next step.
Layer 3: Sculptamold

We are getting there. You can see from the photos above that you can get a good idea of what the final landscape is going to look like, whether you use plaster cloth or newspaper. The final layer will represent the top-of-the-earth. My favorite material by far is "Sculptamold". I have been using it for years and cannot imagine a better product. For the longest time I used it as per the directions, simply mixing it with water and spreading it over the landscape form by hand. When it dries, it is rock-hard. You can even drill into it. The natural "lumpiness" makes for great generic rock surfaces.
However, one day I was reading the November 2005 issue of Model Railroader magazine where an article by Lou Sassi covers a technique he calls "ground goop". Following his article, here's what I now use:
- one part Sculptamold (Walthers; I get mine at Texas Art Supply)
- one part Vermiculite (technical info)
- one part latex paint (earth-tone)
- 3/4 parts white glue
- enough water to keep the mixture moist
Here's what the mixture looks like when it is ready to be applied.
I use a small spatula to spread the "goop" on the scenery base I described above. It goes on really easily, and it stays workable for hours. While it is still wet, I sprinkle Woodland Scenics' green ground foam on top to simulate grass, as well as insert small rocks and debris to give the illusion that they are embedded in the ground. The big advantage I see is that the ground surface is already painted. Even if a piece should break off down the road, it will still be painted the same color as the surface. Using the spatula I was able to get real close to already-scenicked track. This is what it looks like. The color is dependent on the paint color used in the mixture.
The plaster cloth-covered area shown earlier is shown here with the "goop" applied and shaped. I sprinkled some ground foam and small rocks on top while the goop was still wet. You can no longer make out where the cardboard webbing is, except for the general shapes, which now look like grass-covered rock outcroppings. You can always do final shaping using the goop, because it has the consistency of peanut butter or even thicker. It will stay where you put it in the shape that you make it.