sky effect

search for skydome

just a half sphere with a cloud texture mapped onto it

Nothing bizarre about cubical sky boxes. You just render six views of the sky using a 90-degree FOV and a square frame. No distortion besides the normal effects of perspective that occur automatically. Domes are more useful for procedural, dynamic skies like if you're simulating the day/night cycle.

You usually have to clamp the texture edges to prevent lines from appearing on some gfx cards.

you may use following works for sky:

http://www2.imm.dtu.dk/pubdb/views/edoc_download.php/2554/pdf/imm2554.pdf
http://www.geocities.com/ngdash/whitepapers/skydomecolor.html

for clouds: http://www.vterrain.org/Atmosphere/Clouds/index.html