Changing Player Skins
PC
A player can only change their character's skin if they have purchased Minecraft. This is done on the Profile page by uploading a valid .png image file, which will then replace the default skin. The steve.png file in minecraft.jar can also be changed and replaced, but the effects will only be visible to that player, and only players with the default skin will appear different.
Xbox 360 and PS3
There are currently 8 default skin types (with the exception of the skin packs), all of which appear to have Steve's face, but wearing different outfits and skin colors. The following are available through split screen and online only. The skins are available to be chosen in the 'Change Skin' area of Help & Options.
The Xbox and PS3 (Playstation 3) allows transparent skins, because you can't create your own skins on the Xbox or PS3 edition. This prevents issues with completely transparent skin users "haunting" other players.
