youll get varied answers with these questions, as people use different clays. personally I use monster clay. its oil based and has wax so there a few advantages to this: it never dries out like waterbased clay, you can pour silicone directly to it without having to worry about a chemical reaction, and its "recyclable" as in when your done you just melt down the scrap and filter through a mesh screen and its like new again. its about $40 shipped in the states from ebay and comes in a 5 pound block. another thing is when its room temp its usually quite stiff so if you accidentally ding it with a tool its easily fixed. you need to warm it up with a "hot box" or you can simply microwave it for a minute, it becomes easier to work with when its warm.
for tools I use the cheapo multi pack for about $11-15 from a crafts store. I have some I got on ebay for $8 but they aren't as sharp as I would like. youll be using mainly a rake to trim down the lumps of clay into your piece, and kidney shaped metal piece to smoothen out the rake strokes.
don't apply it to fabric, itll stick but then itll messh up the fabric if you intend on reusing it for something else. monster clay "sticks" to cardboard, resin casts, paper, Styrofoam and other things. youll want to get a proper headform or make one from your own head.
others use chavant clay, but I cant comment on that stuff.