Using blender's texture baking tool

From Blender2crystal

Blender has a texture baking tool which can bake material detail to a texture that can be used in your game with blenders new 'Bake Render Meshes' option.

• Start with the default scene, add a plane for the floor and move it down so the whole of the cube is visible. Change the cubes type to genmesh and verify it exports correctly by running it in walktest (CTRL+R)

• To the cube add a new material of whatever you choose- for this example just add an orco mapped texture with Map To toggles Col and Nor turned on. Change the texture to Musgrave and set some colours (change the colours under Map To and the diffuse colour to something). Make sure you set the Nor slider under Map To to something high too- 20 is a good value.

• Under the Editing (F9) context, add a bit of subsurf (2 is fine). Set smooth to true under b2cs render tab for the object. Verify everything exports and runs fine.

• Now make a blender render. See this render? This is how the cube is going to be textured like. Enter editmode, and add any 7 seams without enclosing any faces at all (CTRL+E -> Mark Seam). Enter face select mode and unwrap (U -> Unwrap).

• Under the UV Editing window select Image -> New (ALT+N) with all the faces selected still. Choose a power of 2 size (128, 256, 512, 1024, ...).

• Now go to Render -> Bake Render Meshes -> Full Render (CTRL+ALT+B, 1). You will see the shaded texture is now there. You can also do Texture Only (CTRL+ALT+B, 4) to just get the material as a texture or Normals (CTRL+ALT+B, 3) for a normal map (although I had less of a good experience with this- it seems to produce bad seams).

Also worth checking out is macouno's script [1]. Hopefully the situation will get better in the near future.