Well, good luck with it! I'm sure you'll find lots of helpful advice here.
For mine, I start with regular old plaster (there are much better ways that I've read about, including commercial products like Flex Paste. There's much more on that subject here, I'm sure, than I can help you with.
As for the ground cover itself, I have recently fallen in love with tree moss. I used it in my last diorama and I'm pleased with the results. I picked it up at my local Hobby Lobby in the floral department, packaged under the name Sheet Moss by a company called Forest Naturals. It looks good to me!
This picture shows pretty well how it looks in the finished product:
.
I'll try to find an article that I read the other day--it goes in-depth on how to build up and finish off the groundwork, the best materials to use, etc.
Good luck!
~drucifer