Have you joined the Victoria Quilters' Guild yet? They meet on the second Tuesday of every month, alternating between morning meetings and evening meetings. (Yes, I'm a member, though I almost never get over for meetings.) I think you'll enjoy it.
If you can see your stitches, they're too long and/or the thread is too thick.
Paper piecing requires 20 stitches to the inch, so the paper is well perforated and you don't distort the stitches when you pull the paper away. They should be so small that you can't see them in the well of the seam.
I don't match the thread to the fabric. I just use a neutral dark or light thread, usually grey or tan, depending on whether my fabircs are light or dark, and never have any problem with thread showing.
Fine thread, size 50, is ideal for paper piecing. I really like Aurifil, but there are lots of cotton threads out there in size 50.
The seam will also feel thicker to you because there are two threads in there, rather than one, as you have in hand piecing. That's another reason fine thread is important.
No, you do not need the adjust the tension. You want a nice, balanced stitch.
I'm new to paper piecing... actually new to machine sewing. I've always hand pieced my quilts. But, I thought the new 2009 BOM would be a good opportunity to take the leap into machine stitching. I have a question about paper piecing. I notice that the stitches are more visible once everything is pressed - not only because there are more of them - 20 stitches to the inch - but also because the tension on the stitches is reduced when you remove the paper. It makes the choice of thread colour all the more important. Should I be compensating for the removal of the paper layer and adjusting my tension? Not having actually seen a paper pieced quilt up close and personal, I'm not sure what to I should expect. Any suggestions?