I used to “draw” ER/Flow/Activity/Sequence diagrams through various DSLs that would output PNG files with Graphviz but for quite a while now I like to marry “hand-drawn” ASCII diagrams with a README-driven-design-and-development process.
Embracing the constraints of a simple README for particular sub-systems lets me also put together general systems overview documents very easily after.
That said pencil & paper / whiteboard almost always comes first of course.
http://tom.preston-werner.com/2010/08/23/readme-driven-devel...
Good non-ASCII alternative (for hyperlinked sharing in wikis etc):