I shoot a lot of birds, most of them in trees but some in flight, particularly one of my favourite birds, Hong Kong's kites.
first, if the sky contrasts with the birds too much, it's hard to get detail. in Hong Kong, we have bright grey (polluted) skies more than blue and it makes shooting upward really difficult. with typical grey skies, I have to add 2 stops exposure to the photo, assuming that the bird doesn't take up a major proportion of the photo. if I can get hills or trees in the background, the photo is much easier to deal with because the contrast isn't so intense.
photographing the birds is better done in the morning and before sunset, when the sun is at a very low point so that it lights up the under side of the bird in flight. this helps immensely with the colour and the detail of the bird.
you could probably use a Better Beamer to help improve the lighting situation but I haven't tried it yet.
I am currently manually focussing and plan to train myself continually until I get pretty good at it. if the bird took up most of the frame, I could probably turn on auto-focus but for some reason, the birds simply don't listen to my wishes and fly my way when I'm ready for them ;-)
I frame as I shoot and pan. it's actually a problem because it introduces yet another source of camera movement. manual focus also adds another source of camera movement because I have yet to train myself to stop focussing when I press the shutter button all the way down (unless the camera does this automatically?).
btw, my usual technique for shooting birds (not in flight) is to:
... turn on auto-focus
... push the shutter release down half way to focus quickly on the bird
... frame the shot (I almost never position the bird in the middle of the frame)
... manually adjust the focus until it's 'perfect'
... push the shutter release all the way down and take the photo
... (IMPORTANT) lift the shutter release to the *half* way point again
this prevents the camera from trying to auto-focus again and I can manually adjust and reshoot quickly and effectively without having to repeatedly 'focus-and-position'. I only fully release the shutter release if I need to focus from scratch.
I only have the 70-300 IS DO and 70-200/2.8 non-IS with a 2x lenses. I usually have to get pretty close to the flying birds; 25 feet or less. if you can use a longer lens, it will probably be easier to track and photograph the birds because the angles of rotation are smaller; i.e., not as much panning is needed.
it will take time and patience to get great bird photographs but it's worth it when they begin appearing in your collection. I have yet to get one of a bird in flight but I trust I'll get one soon. I am taking my camera up the hill with me every morning now when I walk up there with our pets. the sun is perfect and the kites are frequently flying around looking for breakfast. any day now...
(I'm using a Canon 350D. I may upgrade to the 5D's successor when it's released early next year.)