A gathering foot is usually a square-shaped foot something like this:
http://www.amazon.com/Singer-Gathering-Foot/dp/B00083KXE2There is also a ruffling foot, but I find them a little harder to use and they look like this:
http://www.amazon.com/Singer-086742-Ruffler/dp/B002GD8ATM/ref=sr_1_3?ie=UTF8&s=home-garden&qid=1256322799&sr=1-3You must remember when using your gathering foot, you need to increase your stitch length and increase your tension in order to produce the gathers. A gathering foot is usually quite a bit cheaper than a ruffler and is simple to use. I have both type of feet, but prefer my gathering foot.
And for your second question, you are right in that shirring usually refers to gathering with an elastic thread. In the case of pettiskirts, this would not be how you'd want the layers gathered. The layers are gathered with regular thread in both the bobbin and needle. You want your gathers to be permanent and not stretch as in the case with most shirring.