My illustrations always start their lives as pencil drawings, but rarely does any trace of pencil show up in the final versions. I am most comfortable drafting in pencil; more specifically, with an H or 2H Staedtler Mars Lumograph pencil. The leads are on the hard side, which I prefer because I like clean lines that don't get smudged easily, and I don't have to stop to sharpen very often. I rely also on my Staedtler Mars Plastic eraser. I've used a lot of erasers and that's my favorite.
You might recognize the top left drawing from an earlier post, which is the same composition, except in color. I scan these pencil drawings, and then trace over them in Photoshop, using my tablet and a thin brush. Then I delete the pencil layer, proceed to color, and add in the background.