Layer styles are a totally valid approach in Photoshop, but they do complicate interchange with Ae. I'd love to see Photoshop take a more procedural, less destructive approach, but I wonder how much a big conceptual redesign like that would upset existing users.
If the Ae team promoted layer styles in the render order (though who knows what this would break), or if they added effects for each layer style and provided translation upon PSD import, that might help -- but I think Ae and Ps have sometimes subtly different approaches that are just plain hard to bridge.
When animating PSDs designed elsewhere, I invariably end up doing a bit of prep work in Ps: at a minimum, re-organizing elements in Ps, collapsing groups into smart objects. Sometimes, I do a lot of prep work: larger-scale re-organizatoin, more extensive use of smart objects to contain layer styles, masks, etc., renaming the layers to contain blending or positioning information, using the Export Layers to Files script, and re-compositing the outputs in Ae.
Personally, I vastly prefer to do design work in Ae rather than Ps, even for stills. In my view, Ae's parametric/procedural approach trumps Ps's destructive approach (smart objects, smart filters, and layer styles notwithstanding), and I find it vastly easier to generate new design elements from scratch in Ae. Sometimes this makes extra work for me at the end if I need to deliver a layered PSD, but I like the flexibility upfront.
Basically, my rule of thumb is Ps for heavy paint work (or when mandated by the client) and Ae for everything else, but note that I'm posting on an After Effects list and not a Photoshop list :)
--
Walter Soyka