[Newbies] How do experienced squeakers design applications?

I have just started building the model classes for my first app. I sketched out, on paper, what I thought the objects should be, and then started coding. However, very quickly, I found that I was confusing the heck out of myself, trying to make all the parts work together. Clearly, I was not approaching the process the right way at all.

So, how do you guys build apps? Do you work out everything on paper first ( with UML diags etc). Or, do you use squeak as you design tool, creating stub classes as you realize you need them.

Also, do you try to get one class to pass all it's tests first, before you move on?

Basically, I am interested in the rules of thumb that you find helpful.

Thanks Andy