Take a look at the moss Shep Paine used on the Jadgpanzer IV diorama... I'm not exactly sure what kind it is though. He just says it's "garden moss"...
http://www.itzproductions.com/Misc_Pages/shep_paine.htm
I've used lichen, torn into "branches" and then sprayed it with clear varnish, then dipped and rolled it around in dried oregnano, thyme, and dill as well (Gives the build an interesting smell, too)... Then spray it again to lock everything down. I use tempra paint to mix up various shades of green and tan to spray it with. It's a lot cheaper than using hobby paints and goes a long way.
I use white glue to fix the stuff to the model on the top, sides I use CA... Don't just glue it haphazardly all over the model though. There needs to be a way that the crew made it stay there, so you should model that as well... Vehicles that are parked in position, like howitzers, SP guns, tanks in ambush, etc. you can lean branches against them, "moving" vehicles need straps, ropes, or wires holding the greenery in place... For tall grass camo, like you'd see on the Russian Steppes, I use paintbrush bristles... A cheapo, 4-inch brush will give you enough "grass" for two or three models...