AO bakes rely on scene lamps in blender, so make sure every angle of your model is covered by at least one lamp, make sure it looks 'proper' in shaded view (under textured in .49, or just textured in anything above .5) and be sure to jack up the AO passes in the world tab, which removes the 'grit' from the AO bake, otherwise everything looks like quake II with textures of a higher resolution than six.
also set it as soft light in photoshop, or hard light with a low transparency, a really stiff bake just ruins a model, as it leaves nothing to the actual shading ingame, but seeing as all the SM materials used are just horrible shadless flat colour, mabye it's best to leave it on high. But none the less, the art of making something look nice is simply the use of subtlety. soft colours, nice shading and soft occulsion looks good, and actually sells colour more than pure saturation and horrible ungodly shading or ostentatious lackthereof.
also i see a lot of project from view mapping on that model. please don't do that, especially if you're relying on AO bakes for model definition