The Type Tool (shortcut T) works very much like the Type Tool in Photoshop. When you select the Type Tool you will see a toolbar appear at the top of your screen. This contains all of the basic options for the Type Tool. In Illustrator CS3 you will see that the titles are clickable (represented by blue and underlining). If you click on these titles you get more options. Clicking Character for example brings up a host of options where you can select the font family, font style, leading and even the character rotation.
You can fill a shape you have drawn with text. Draw a circle using the Elipse Tool (shortcut L). Now select the area type tool and click on the edge of the circle. You will now see that you can add type inside the shape. You will note that the shape itself is just used to define the path so you get text in a circle shape without the circle.
You can get type to follow a path using this tool. Draw a path using the the pan tool and then select the Type on a Path tool.
Now hover over the path and click. You can now type text that will follow the path you have drawn.
All of the options above are also available vertically should you want your type to go down the page rather than across it. If you click and hold on the Text Tool icon you will see a fly-out menu appear where you can select the vertical options.
With the type tool selected go to Window > Workspace > Type. This brings up a couple of additional options in the right hand pane. Perhaps the most useful is the Character and Paragraph styles pane. These allow you to define and reuse styles in your illustrator document. To do this style your text using the Character and Paragraph tabs. Once your text is how you want it move to the pane below. Click on the create new style icon next to the Trash can. Your style will be added. You can double click it to give it a name. You can now reuse this style throughout your illustrator document by highlighting text and double clicking on your saved style.
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