I did one in my daughters room when they were younger and i just did it in pencil first (freestyle, with no stencil or template) and painted it with acrylic paints. It came out really cool. I think the trick is to not stress about it too much, It can always be painted over later. I also saw something recently that transfers an image to the wall and you can paint over it. Check out this website for more info
http://www.ehow.com/how_17473_paint-wall-mural.html

I've read somewhere than you can buy wall paint in small cans, it might be a better solution because acrylics peel off after a while, they're really not meant for walls.

You can try using color spray, but it takes some practice to learn how to handle it. It's quite popular in clubs and themed pubs, my ex boyfriend is a graffiti artist and he used to do such commissions. It could be frustrating to get it right the first time, I know because I tried. But if you don't like it, you can just spray over it, spray is much more forgiving than ordinary paint.