And note what Water Music says about the collar bone. The pose in your screenshot is impossible. You can't lift your arms like that and not have your shoulders come up above the height of your chin.
Yeah, I forgot to lift clavice bones. GOnna do it right now =)
To start, I'd recommend minimizing the number of vertices right at the joint. For the parts of your model that stay fairly static you can load up as much detail as your system can handle, but at the joints the fewer points you can get away with the easier your life becomes.
I try to make the whole vertex count as low as possible - I want to use models in a game later. Aaaaand I don't really think I can cut points near joints lower than now - they would look even more horrible than now.
There should be some tutorials out there on the web, somewhere, as this is a very common problem
But no tips in general. Almost every tutorial was for 3D Max and they used something that is available only there.
I think the easier way would be to cut arms completely and make them "Tomb Raider 1 style". I wonder what should I hide the joints with though. Shoulder pads?
Anyway, thanks for the help. Will try to make something about those joints...