i animate frame-by-frame, generally with each character on its own layer re-drawing all the body parts on each frame. if you want to keep the body parts separate, you can use grouping (ctrl-g) or symbols (f8) to keep them separate so that they don't mess each other up.
i would suggest animating frame-by-frame, though, because for every action (like raising your arm) the entire body moves. you need to take into account shoulders, torso, legs, and head for every action. its a lot easier to animate realisticly frame-by-frame, albeit time consuming.