1) Target sells either fabric or silicone nipple covers. Both need to be "primered" and blended color wise to the body before you start to paint. Fabric sucks up paint. Silicone can reflect paint differntly, especially when metallics are used. I like using the silicone.
sells nice, professional grade latex shields.
sells cool felt and glitter pasties. Nice and big and a lot of FUN to work into designs.
4) or... cut to shape from adhesive bra material
1) Can be fun to work into a paint - see my welder gal.
2) May or may not be able to be removed.
3) Can cause a problem with strange bumps and adhesion under the covers.
Water based with setting liquid may be your best bet!
1) Lace. Experiment with double spraying a base, then the lace as a mask. Very good for disguising pieces-parts.
2) Stencil patterns. Craig Fraser's got a nice line of skulls from Artool...
3) Design. Align the nipples to seams or texturs. Like Rich said!
Hope this helps...